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While Badger Meter, Inc. (NYSE:BMI) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$105 and falling to the lows of US$76.32. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Badger Meter's current trading price of US$76.39 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Badger Meter’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Badger Meter
Is Badger Meter still cheap?
According to my valuation model, Badger Meter seems to be fairly priced at around 2.8% below my intrinsic value, which means if you buy Badger Meter today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $78.62, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Badger Meter’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Badger Meter?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Badger Meter's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? BMI’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on BMI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.