Over the past six months, Itron has been a great trade, beating the S&P 500 by 24.9%. Its stock price has climbed to $128.60, representing a healthy 30.3% increase. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is ITRI a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Does Itron Spark Debate?
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Two Positive Attributes:
1. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Itron’s EPS grew at an astounding 21.8% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.
2. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Itron’s ROIC has increased significantly. its rising ROIC is a good sign and could suggest its competitive advantage or profitable growth opportunities are expanding.
One Reason to be Careful:
Long-Term Revenue Growth Flatter Than a Pancake
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Itron struggled to consistently increase demand as its $2.44 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result, but there are still things to like about Itron. 
Final Judgment
Itron’s positive characteristics outweigh the negatives, and with its shares beating the market recently, the stock trades at 23.1× forward P/E (or $128.60 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than Itron
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