Water control and measurement company Badger Meter (NYSE: BMI) fell short of the market’s revenue expectations in Q1 CY2026, with sales falling 9% year on year to $202.3 million. Its GAAP profit of $0.93 per share was 21.8% below analysts’ consensus estimates.
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Badger Meter (BMI) Q1 CY2026 Highlights:
- Revenue: $202.3 million vs analyst estimates of $231.1 million (9% year-on-year decline, 12.5% miss)
- EPS (GAAP): $0.93 vs analyst expectations of $1.19 (21.8% miss)
- Adjusted Operating Income: $37.34 million vs analyst estimates of $45.35 million (18.5% margin, 17.7% miss)
- Operating Margin: 17.4%, down from 22.2% in the same quarter last year
- Free Cash Flow Margin: 14.6%, up from 13.5% in the same quarter last year
- Market Capitalization: $4.44 billion
“Entering 2026, we expected project pacing dynamics to favor the back half of the year,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer.
Company Overview
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.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Badger Meter’s 15.6% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Badger Meter’s annualized revenue growth of 10% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Badger Meter missed Wall Street’s estimates and reported a rather uninspiring 9% year-on-year revenue decline, generating $202.3 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months, similar to its two-year rate. This projection is healthy and suggests the market is baking in success for its products and services.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Badger Meter has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.8%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Badger Meter’s operating margin rose by 3.5 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q1, Badger Meter generated an operating margin profit margin of 17.4%, down 4.9 percentage points year on year. Since Badger Meter’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Badger Meter’s EPS grew at 20.3% compounded annual growth rate over the last five years, higher than its 15.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into Badger Meter’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Badger Meter’s operating margin declined this quarter but expanded by 3.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Badger Meter, its two-year annual EPS growth of 12.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q1, Badger Meter reported EPS of $0.93, down from $1.30 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Badger Meter’s full-year EPS of $4.42 to grow 16.7%.
Key Takeaways from Badger Meter’s Q1 Results
We struggled to find many positives in these results. Its revenue missed and its adjusted operating income fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 16.9% to $126.50 immediately after reporting.
Badger Meter’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
