Reassessing Badger Meter (BMI) After A 28% One Year Share Price Decline
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If you are wondering whether Badger Meter’s share price still reflects its underlying value, you are not alone, especially given how widely opinions on the stock can differ.
The shares last closed at US$154.88, with a 2.4% gain over the past 7 days, a 9.8% decline over 30 days, a 12.2% decline year to date, and a 28.2% decline over 1 year. The 3 year and 5 year returns sit at 31.5% and 51.6% respectively.
Recent coverage has focused on how this mix of shorter term declines and longer term gains is shaping sentiment around Badger Meter. This has come alongside broader discussions about how investors are thinking about growth and quality in the tech sector. Together, these themes help explain why some shareholders are reassessing what counts as a reasonable price for the stock today.
Our model currently gives Badger Meter a valuation score of 1 out of 6, which means only one of six checks suggests the shares might be undervalued. Below, we walk through what that actually means using several valuation approaches before circling back at the end to a more holistic way of judging whether the current price makes sense.
Badger Meter scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting the cash it could generate in the future, then discounting those cash flows back to today in $ terms.
For Badger Meter, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow sits at about $169.1 million. Analyst estimates and extrapolated figures suggest free cash flow projections such as $169.4 million in 2026 and $218.5 million in 2029, with further values extended out to 2035 using Simply Wall St assumptions.
When all those projected cash flows are discounted back, the resulting intrinsic value from this DCF is US$144.82 per share. Compared with the recent share price of US$154.88, the model implies the stock is about 6.9% overvalued. This is a relatively small gap and within the sort of margin where assumptions really matter.
Result: ABOUT RIGHT
Badger Meter is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
For a profitable company like Badger Meter, the P/E ratio is a useful way to think about value because it ties the share price directly to the earnings that shareholders are paying for. In simple terms, higher growth expectations and lower perceived risk can justify a higher P/E, while slower growth or higher risk usually call for a lower, more conservative multiple.
Badger Meter currently trades on a P/E of 32.23x. That sits above the Electronic industry average of 28.31x, and below the peer group average of 83.71x, so the market is valuing it more highly than the sector overall, but not as highly as some peers.
Simply Wall St also calculates a Fair Ratio, which is the P/E level that might fit Badger Meter given its earnings growth profile, industry, profit margins, market cap and risk factors. This Fair Ratio for Badger Meter is 23.39x, which is designed to be more tailored than a simple comparison with industry or peer averages because it incorporates company specific characteristics rather than broad groupings alone. With the current P/E of 32.23x sitting above the Fair Ratio of 23.39x, the shares screen as somewhat expensive on this metric.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company tied directly to your own assumptions for future revenue, earnings, margins and a Fair Value that you can compare with today’s share price.
On Simply Wall St, Narratives live in the Community page and turn that story into a financial forecast and Fair Value estimate. They are then kept updated automatically when fresh information such as earnings or news is added to the platform.
For Badger Meter, one investor might align with a more cautious Narrative that uses a Fair Value of about US$172.00. Another might prefer a more optimistic view closer to US$264.00. By setting these side by side with the current price, you can quickly judge whether the stock looks expensive or cheap against the story you find most convincing.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
