Badger Meter (BMI) Breakout After Earnings

Yesterday, Badger Meter (BMI) reported results that didn’t appear all that stellar, but the stock broke out big with heavy volume and closed the day up about 10%.  The company reported an EPS of .36/share which was inline with Wall St estimates and is a 26% decrease from the year ago quarter.  Revenues came in at $61.8 million and was also below the year ago results by 5%.  However, the worst may be behind BMI and that may be what traders saw yesterday. 

The CEO acknowledged that the slowdown of 2009 carried into the first few months of 2010, but orders began to increase significantly in March.  He went on to say that many water utilities were delaying purchase decisions until decisions on federal stimulus funds were made.  Those funds were allocated by each state in mid February, so the orders are beginning to flow.  During the quarter, higher commodity prices, particularly copper eroded profits.

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The CEO of BMI commented on the quarter: “We were pleased to see an end to the uncertainty related to stimulus funding for our water utility customers and are hopeful that this signals a return to more typical purchasing patterns. We are also pleased with our earnings performance for the first quarter as compared to last year’s record quarter, given the continued challenges in the economy and the headwinds of increasing copper prices. We believe the higher sales going into the second quarter could help to compensate for the impact of increased commodity prices on our overall performance for the second quarter.”

Shares of BMI broke out of a long base above 40.92 yesterday with heavy volume.

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