Badger Meter: Investor Day Recap: More than Just Meters to Hit HSD% Growth

Research evidence excerpt

Badger Meter: Investor Day Recap: More than Just Meters to Hit HSD% Growth

21 May 2026

Multi - Industry & Electrical Equipment

Badger Meter

expectations that got a little extra tailwind from the QTD buybacks disclosure.

There were not many fireworks with the company's five-year targets, including

6-8%/HSD% sales growth. Unsurprisingly, the most in focus target was 6-8%/HSD

% through the cycle sales growth. In our view, the build to 6-8%/HSD% growth is

generally reasonable including SaaS and Beyond the Meter growing DD%,

Customer Water Usage (i.e. core meter offering excluding uplift in growth from

SaaS) growing MSD%, and Flow Instrumentation growing LSD%. Where could

there be conservatism at play? We think the assumption that SaaS downshifts from

a 2020-2025 CAGR of 28% to just ~15% from 2025-2030 could have upside, though

the company is contending with the law of large numbers and a higher base.

Further, we think that the only MSD% core meters growth could prove conservative

if the company keeps up its share gains (ex. 2020-2025 units CAGR of 7% vs.

industry at 2-3%). Badger Meter highlighted that while it always works to gain

share, it does not need the same level of historical share gains to achieve its 6-8%/

HSD% growth target. At the same time, there was some quibbling about if 6-8% is

really "HSD%". Lastly, the other targets outside of sales were generally as-

expected: unchanged 39-42% gross margins, 25-30% EBITDA incrementals (up

from 20-25% EBIT - not EBITDA - incrementals), 10-15% EPS growth CAGR, and

>100% FCF conversion.

We calculate HSD% EPS revisions potential in 2030 before capital allocation (Mid-

Teens% after), though we highlight this implies a quick snap-back to consistent

8-9% growth and high-20%s incrementals for 2027-2030. We calculate 2030 EPS