Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Badger Meter, Inc. (BMI) on Crack the Market’s Substack by Ozeco. In this article, we will summarize the bulls’ thesis on BMI. Badger Meter, Inc. (BMI)'s share was trading at $242.75 as of 13th June. BMI’s trailing and forward P/E were 53.47 and 51.81 respectively according to Yahoo Finance.
An engineer overseeing the calibrations of a sophisticated flow meter.
Badger Meter stands out as one of the highest quality names in the market, combining best-in-class execution with significant margin expansion potential in a structurally attractive industry. The company is deeply aligned with long-term trends in resource efficiency through its focus on Advanced Metering Infrastructure (AMI) and Software as a Service (SaaS), both of which are increasingly critical amid growing regulatory scrutiny and global sustainability efforts.
Operating in an oligopolistic North American water meter market, where approximately 85% of demand stems from replacements, Badger benefits from a highly fragmented and risk-averse utility customer base. This dynamic ensures a slow but steady shift from legacy mechanical meters to higher-value connected static meters, supporting mid- to high-single-digit organic growth over the next two decades. This mix shift, coupled with modest pricing power and installed base expansion, provides a durable long-term runway.
Importantly, Badger’s SaaS revenue, which has grown at a robust 28% CAGR from 2019 to 2024, further strengthens the resilience and predictability of its revenue base while supporting gross margins above the historical 38–40% target range.
Despite traditionally trading at a premium, Badger’s recent valuation derating presents a rare entry point into a business that combines defensive characteristics with secular growth drivers. Though the stock still commands a high multiple, it is now more reasonably priced given its durable competitive positioning, recurring revenue momentum, and long-term visibility.
For investors seeking quality compounded by structural tailwinds and operational excellence, Badger Meter represents a compelling opportunity.
Previously, we covered Durable Value Creators’ bullish thesis on Badger Meter (BMI), emphasizing its smart water ecosystem, SaaS growth, and regulatory tailwinds. Since then, the stock is up ~11%. Crack the Market’s update reinforces BMI’s quality, noting its oligopoly position, margin upside, and structural growth. With SaaS revenue compounding at 28% and valuation more reasonable, BMI remains a compelling, defensive long-term compounder.
