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Why Institutions Keep Buying Badger Meter After the Big Drop
Written by Thomas Hughes. Article Posted: 1/30/2026.
Key Points
- Badger Meter is set up to rebound robustly by year's end as growth underpins cash flow and capital returns.
- Institutions are accumulating this stock and are likely to accelerate activity with shares near long-term lows.
- Valuation and analyst forecasts suggest a 50% increase in the stock price is possible.
Valuation concerns capped gains for Badger Meter (NYSE: BMI) in 2025. Subsequent events pushed the market into a correction that now appears overextended and poised to rebound.
Although valuation was a concern, a roughly 40% decline has realigned the stock with fundamentals. Now trading at long-term lows — below 20X projected 2030 earnings — the market appears to be pricing in sustained growth, and a 50% rebound could be possible in coming quarters.
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Badger Meter’s long-term guidance, reaffirmed in the Q4 2025 earnings release, calls for sustained high-single-digit revenue growth, annualized margin expansion, and robust free cash flow conversion. These drivers are expected to produce a mid-teens compound annual growth rate in earnings and cash flow, with the company forecasting free cash flow conversion above 100%.
Badger Meter: Free Cash Flow, Capital Returns, and Accumulating Institutions
Free cash flow conversion is a critical factor. As a profitable mid-cap, Badger Meter leverages revenue growth and operational improvements to grow cash flow and return capital to shareholders.
Capital returns aren't outsized, but they are reliable and expected to grow. Dividends run near 30% of the 2026 earnings forecast. The company also maintains a strong balance sheet and uses share buybacks to manage the share count.
Buybacks appear sufficient to offset share-based compensation and are reducing the diluted share count—another reason for long-term investors to consider exposure.
Institutional activity highlights the value present in this profitable, dividend-paying, mid-cap growth story.
Institutions own roughly 90% of the stock, buying on balance every quarter in 2025, accelerating purchases late in the year, and continuing the trend in early 2026. That accumulation creates a solid support base and underpins an outlook for price advances in upcoming quarters.
The Q4 release may not have sparked a retail buying wave, but it did not weaken the capital-return outlook — if anything, it reinforced it. Given the institutional trends, further accumulation is likely.
Badger Meter Falls After Mixed Results
Revenue rose 7.6% to over $220 million, missing consensus and disappointing some investors. Strength was evident with utility customers and adoption of smart-water technologies, trends the company expects will drive growth in the year ahead.
Operating margin expanded by nearly 50 basis points, supporting stronger bottom-line performance despite softer revenues. GAAP earnings grew about 10%, outpacing top-line growth and beating consensus by nearly 200 basis points, enabling balance-sheet improvement alongside increased R&D, CapEx, and capital returns.
Badger Meter’s balance sheet shows no red flags — rather, incentives for ownership. Cash and current assets declined slightly but were offset by higher total assets and lower liabilities, resulting in roughly a 17.5% increase in shareholder equity and persistently low leverage. The company funds R&D and acquisitions from operating cash and cash on hand, has no debt, and carries total liabilities of roughly 0.35X equity.
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