Itron: From Smart Meters to Smart Profits
Tips E-17: A 1-minute summary of my fundamental analysis of Itron Inc. (NASDAQ: ITRI)
Investment Thesis
Over the past decade, the company shifted from hardware-centric metering to networked and software-driven solutions, unlocking operating leverage and strong EPS growth. While fundamentals have clearly improved and financial risk is low, the stock price already reflects optimistic assumptions about future growth and margins.
Main Business
Itron provides smart meters, communication networks, and analytics software that enable utilities to manage energy and water more efficiently. The company is now best viewed as a grid technology platform rather than a pure hardware supplier, serving primarily North American utilities.
Growth
Despite operating in a structurally growing smart grid market, Itron’s revenue growth has remained modest over the past decade. From 2015 to 2024, revenue grew at just 2.9% CAGR.
Profitability
Itron converted low revenue growth into exceptional earnings growth through margin expansion and operating leverage. These structural improvements drove a 36% CAGR in profit after tax and a sharp rebound in returns since 2023.
Financial Strength
The company is financially sound, supported by strong cash generation, ample liquidity, and disciplined capital allocation.
Peer Performance
Itron historically lagged peers on profitability and capital efficiency but delivered the fastest EPS growth in the group. However, recent improvements in ROIC and margins suggest its long-term restructuring and software pivot are beginning to close the performance gap.
Valuation
Even under optimistic assumptions, Itron’s intrinsic value remains below its market price, offering no margin of safety.
For more insights and valuation details, refer to the original article on Seeking Alpha titled How Itron Turned Flat Sales Into Explosive EPS Growth
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Disclaimer & DisclosureI am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
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