Badger Meter Shares Jump Nearly 10% as Profit Beats Estimates and Water Tech Firm Lifts Dividend for 34th Year

Shares of Badger Meter Inc. jumped nearly 10% on Thursday after the water technology company reported third-quarter earnings that topped analysts' expectations, expanded profit margins and raised its dividend for the 34th consecutive year, outweighing a slight shortfall in revenue.

Badger Meter shares rose $13.14, or 9.97%, to $145 in early trading, giving the Milwaukee-based company a market value of about $4.2 billion.

The rally offered relief for a stock that had fallen more than 29% over the past year amid concerns about uneven sales.

Earnings beat, revenue slightly short

Badger Meter, which makes water meters and related technology used by utilities to track water use, reported earnings of $1.24 per diluted share for the quarter ended Sept. 30, up 4% from $1.19 a year earlier and about 3 cents above the average analyst estimate.

Sales totaled $235.9 million, roughly flat from $235.7 million a year earlier but up 6% from the previous quarter. That fell short of analysts' expectations by about $4.9 million.

Excluding its recent acquisition of UDlive, the company's base sales were $230.3 million.

Margins improve

Profitability was a highlight. Gross margin rose 1.2 percentage points to 41.9%, while operating earnings increased 4% to $47.7 million. The operating margin improved to 20.2% from 19.6% a year earlier.

The company also cut base selling, engineering and administrative expenses by 2%, helping offset uneven sales.

Kenneth C. Bockhorst, Badger Meter's chairman, president and chief executive, pointed to "continued sequential sales and operating profit improvement" in the quarter.

Segment performance

Sales of utility water products, Badger Meter's largest business, were flat compared with a year earlier, including $5.6 million from UDlive. Excluding the acquisition, utility water sales rose 5% from the prior quarter but fell 3% from a year earlier, reflecting the uneven timing of advanced metering infrastructure projects.

Advanced metering infrastructure, or AMI, refers to systems that allow utilities to read meters remotely and monitor water use in real time. Demand for the technology has been a key growth driver for Badger Meter, though the timing of large utility projects can cause sales to fluctuate from quarter to quarter.

Sales of flow instrumentation products, which measure the flow of liquids in industrial settings, rose 2%, driven by water-focused markets.

Dividend increase and buybacks

Badger Meter raised its annual dividend by 10% to $1.76 per share, marking 34 straight years of dividend increases, a record that places it among a select group of U.S. companies with long histories of rising payouts.

The company also bought back about $55 million of its own shares during the quarter, a sign of confidence in its financial position.

Upbeat outlook

Management said it expects base revenue to grow both from the previous quarter and from a year earlier in the fourth quarter, despite fewer operating days in that period. Bockhorst said the company expects "to sustain this growth momentum into 2027."

The company said it is focused on managing costs to offset the uneven sales pattern this year and ongoing material cost pressures related to the electronics supply chain.

Why investors cheered

The stock's strong reaction suggests investors were encouraged by the improvement in profitability and the company's confident outlook, after a year in which uneven sales weighed on the shares.

Badger Meter is viewed by many investors as a long-term beneficiary of efforts by utilities to modernize aging water infrastructure, reduce water loss and improve efficiency through digital technology.

For the first nine months of the year, diluted earnings fell to $3.19 per share from $3.65, reflecting weaker results earlier in 2026. The third-quarter rebound and outlook for growth suggest the company may have moved past the worst of that slowdown.

What's next

Investors will watch the fourth-quarter results for evidence that sales growth is returning as management expects, and for signs that utility spending on smart metering projects is picking up.

The stock's valuation, at about 30 times trailing earnings, reflects high expectations for long-term growth, meaning the company will need to deliver on its outlook to sustain the rally.