As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the inspection instruments industry, including Badger Meter (NYSE:BMI) and its peers.
Measurement and inspection instrument companies may enjoy more steady demand because products such as water meters are non-discretionary and mandated for replacement at predictable intervals. In the last decade, digitization and data collection have driven innovation in the space, leading to incremental sales. But like the broader industrials sector, measurement and inspection instrument companies are at the whim of economic cycles. Interest rates, for example, can greatly impact civil, commercial, and residential construction projects that drive demand.
The 7 inspection instruments stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 1.5% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Luckily, inspection instruments stocks have performed well with share prices up 18.2% on average since the latest earnings results.
Best Q2: Badger Meter (NYSE:BMI) The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.
Badger Meter reported revenues of $216.7 million, up 23.2% year on year. This print exceeded analysts’ expectations by 6.5%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
“Our second quarter sales surpassed the $200 million milestone for the first time on the continued strength of AMI demand coupled with customer-accelerated backlog conversion. Record operating profit margins and robust EPS growth in the quarter were the result of higher sales volumes, operational execution and continued selling, engineering and administration (SEA) expense leverage,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer.
Badger Meter scored the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 11.4% since reporting and currently trades at $216.38.
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Itron (NASDAQ:ITRI) Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ:ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Itron reported revenues of $609.1 million, up 12.6% year on year, outperforming analysts’ expectations by 1.6%. The business had a very strong quarter with an impressive beat of analysts’ earnings estimates.
The market seems content with the results as the stock is up 3.7% since reporting. It currently trades at $107.22.
Weakest Q2: Mirion (NYSE:MIR) With its monitoring devices installed on spacecraft, Mirion (NYSE:MIR) offers radiation technology to government agencies, healthcare providers, and industrial companies.
Mirion reported revenues of $207.1 million, up 5% year on year, falling short of analysts’ expectations by 1.7%. It was a disappointing quarter, leaving some shareholders looking for more. But a bright spot was that its full-year EBITDA guidance slightly topped analysts' estimates.
Interestingly, the stock is up 3.7% since the results and currently trades at $10.68.
Keysight (NYSE:KEYS) Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors.
Keysight reported revenues of $1.22 billion, down 11.9% year on year. This result surpassed analysts’ expectations by 1.9%. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ earnings and operating margin estimates.
Keysight had the slowest revenue growth among its peers. The stock is up 10% since reporting and currently trades at $152.40.
Teledyne (NYSE:TDY) Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.
Teledyne reported revenues of $1.37 billion, down 3.6% year on year. This result topped analysts’ expectations by 1.1%. It was a strong quarter as it also put up an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ organic revenue estimates.
The stock is up 7.4% since reporting and currently trades at $432.13.
This content was originally published on Stock Story
