Badger Meter: Investor Day Preview: Making the Case for HSD% Growth

Research evidence excerpt

Badger Meter: Investor Day Preview: Making the Case for HSD% Growth

13 May 2026

Multi - Industry & Electrical Equipment

Badger Meter

We calculate LSD% EPS revisions potential in out-years before capital allocation

(~HSD% after) assuming Badger Meter consistently executes on HSD% growth

with 25-30% incrementals. Our main takeaway from the analysis is that consensus

is already dialing in close to the likely medium-term targets including HSD% growth

and 25-30% incrementals. For 2027-2030, we calculate a consensus growth CAGR

of 8% and 27% incrementals, and it seems a bit challenging to point to the need for

major positive revisions here. Inside we also run analysis on potential Utility Water

organic volumes vs. underlying trend growth to gauge the potential for "over-

earning" after the post-COVID boom in activity. Here our conclusion is that there

does seem to be some evidence of volumes trending above the LSD% long-term

trend, and this could point to another tough year in 2027 to reset back to trend, but

we admit there are many assumptions here (ex. share gains, other incremental

growth drivers, etc.).

We expect similar messaging on capital allocation with some incremental

spotlight on opportunistic share repurchases. Badger Meter historically follows a

relatively common capital allocation strategy with its first use of capital being

internal investment to drive organic sales growth. Next is its target to grow the

dividend annually in line with earnings. Third, the company has been active on the

M&A front. One potential change to the prior three priorities is a fourth prong to

opportunistically repurchase shares, such as the $38m of buybacks in 1Q26. That

said, we do not expect a major, chunky buyback announcement given the stock's