Looking back on inspection instruments stocks’ Q3 earnings, we examine this quarter’s best and worst performers, 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 4 inspection instruments stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.9% since the latest earnings results.
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 $235.7 million, up 13.1% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
“We demonstrated solid operating leverage in the third quarter on strength in both sales and profitability as we continued to successfully integrate the SmartCover acquisition and build on record growth in our core business in recent periods," said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer.
Badger Meter pulled off the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 5.3% since reporting and currently trades at $177.39.
Best Q3: 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 $1.42 billion, up 10.3% year on year, outperforming analysts’ expectations by 2.5%. The business had an exceptional quarter with a solid beat of analysts’ backlog estimates and EPS guidance for next quarter exceeding analysts’ expectations.
Keysight achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 20.5% since reporting. It currently trades at $214.16.
Is now the time to buy Keysight? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: 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 $581.6 million, down 5.5% year on year, exceeding analysts’ expectations by 0.6%. It may have had the worst quarter among its peers, but its results were still good as it also locked in EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ adjusted operating income estimates.
Itron delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 28.8% since the results and currently trades at $98.39.
Read our full analysis of Itron’s results here.
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 $1.54 billion, up 6.7% year on year. This number topped analysts’ expectations by 0.8%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is down 9.9% since reporting and currently trades at $517.
Read our full, actionable report on Teledyne here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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