Badger Meter (NYSE: BMI) and ESCO Technologies (NYSE:ESE) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitabiliy.

Institutional and Insider Ownership

84.3% of Badger Meter shares are owned by institutional investors. Comparatively, 96.4% of ESCO Technologies shares are owned by institutional investors. 4.5% of Badger Meter shares are owned by insiders. Comparatively, 2.3% of ESCO Technologies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Badger Meter and ESCO Technologies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Badger Meter $395.15 million 3.32 $77.49 million $1.17 38.55
ESCO Technologies $607.24 million 2.66 $105.50 million $1.93 32.38

ESCO Technologies has higher revenue and earnings than Badger Meter. ESCO Technologies is trading at a lower price-to-earnings ratio than Badger Meter, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Badger Meter and ESCO Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Badger Meter 8.67% 13.19% 9.52%
ESCO Technologies 8.29% 8.42% 5.13%

Risk and Volatility

Badger Meter has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, ESCO Technologies has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Dividends

Badger Meter pays an annual dividend of $0.46 per share and has a dividend yield of 1.0%. ESCO Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. Badger Meter pays out 39.3% of its earnings in the form of a dividend. ESCO Technologies pays out 16.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ESCO Technologies has increased its dividend for 15 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Badger Meter and ESCO Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Badger Meter 0 2 1 0 2.33
ESCO Technologies 0 1 3 0 2.75

Badger Meter presently has a consensus target price of $44.50, indicating a potential downside of 1.33%. ESCO Technologies has a consensus target price of $57.67, indicating a potential downside of 7.73%. Given Badger Meter’s higher possible upside, equities analysts clearly believe Badger Meter is more favorable than ESCO Technologies.

Summary

ESCO Technologies beats Badger Meter on 9 of the 17 factors compared between the two stocks.

Badger Meter Company Profile

Badger Meter, Inc. is a manufacturer and marketer of products incorporating flow measurement, control and communication solutions, serving water utilities, municipalities, and commercial and industrial customers around the world. The Company’s products measure water, oil, chemicals and other fluids, provide and communicate timely measurement data. Its product lines include two categories: sales of water meters and related technologies to municipal water utilities (municipal water), and sales of meters to various industries for water and other fluids (flow instrumentation). The municipal water offering includes mechanical and ultrasonic (electronic) water meters and related technologies and services used by water utilities as the basis for generating water and wastewater. The flow instrumentation category includes the sale of meters and valves around the world to measure and control materials flowing through a pipe or pipeline, including air, steam, oil, and other liquids and gases.

ESCO Technologies Company Profile

ESCO Technologies Inc. (ESCO) is a producer of engineered products and systems sold to customers for utility, industrial, aerospace and commercial applications. The Company operates through four segments: Filtration/Fluid Flow (Filtration), RF Shielding and Test (Test), Utility Solutions Group (USG) and Technical Packaging. The filtration segment’s activities are managed by its subsidiaries, Crissair, Inc. (Crissair), PTI Technologies Inc. (PTI), VACCO Industries (VACCO) and Westland Technologies Inc. (Westland). The Test segment activities are managed by its subsidiaries, Beijing Lindgren ElectronMagnetic Technology Co., Ltd., ETS-Lindgren Inc. and ETS-Lindgren OY. The USG segment activities are managed by its subsidiaries, including Doble Engineering Company, Doble PowerTest Ltd and Doble TransiNor AS. The technical packaging activities are managed by its subsidiaries, Thermoform Engineered Quality LLC (TEQ), Plastique Limited and Plastique Sp. z o.o.

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