Critical Comparison: Badger Meter (NYSE:BMI) versus Methode Electronics (NYSE:MEI)

Badger Meter (NYSE:BMI) and Methode Electronics (NYSE:MEI) are both technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, analyst recommendations and earnings.

Dividends

Badger Meter pays an annual dividend of $1.76 per share and has a dividend yield of 1.2%. Methode Electronics pays an annual dividend of $0.20 per share and has a dividend yield of 1.4%. Badger Meter pays out 40.6% of its earnings in the form of a dividend. Methode Electronics pays out -19.2% 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. Badger Meter has increased its dividend for 32 consecutive years. Methode Electronics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Badger Meter and Methode Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Badger Meter	14.36%	18.49%	13.02%
Methode Electronics	-3.52%	-5.63%	-2.94%

Insider and Institutional Ownership

89.0% of Badger Meter shares are held by institutional investors. Comparatively, 95.5% of Methode Electronics shares are held by institutional investors. 1.0% of Badger Meter shares are held by company insiders. Comparatively, 1.9% of Methode Electronics shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Badger Meter and Methode Electronics”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Badger Meter	$916.66 million	4.61	$141.63 million	$4.33	34.18
Methode Electronics	$1.02 billion	0.51	-$35.70 million	($1.04)	-14.10

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Badger Meter and Methode Electronics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Badger Meter	1	5	6	0	2.42
Methode Electronics	1	2	2	1	2.50

Badger Meter currently has a consensus price target of $166.33, suggesting a potential upside of 12.37%. Methode Electronics has a consensus price target of $22.00, suggesting a potential upside of 50.07%. Given Methode Electronics’ stronger consensus rating and higher possible upside, analysts plainly believe Methode Electronics is more favorable than Badger Meter.

Risk & Volatility

Badger Meter has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, Methode Electronics has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500.

About Badger Meter

Badger Meter, Inc. manufactures and markets flow measurement, quality, control, and communication solutions worldwide. It offers mechanical or static water meters, and related radio and software technologies and services to municipal water utilities market. The company also provides flow instrumentation products, including meters, valves, and other sensing instruments to measure and control fluids going through a pipe or pipeline, including water, air, steam, and other liquids and gases to original equipment manufacturers as the primary flow measurement device within a product or system, as well as through manufacturers' representatives. In addition, the company offers ORION Cellular endpoints to power network as a service; ORION mobile read endpoints support for deploying AMR solution; radio products; hardware, instruments, and sensors, and related software, to enhance connected data to a water utility's operation; water quality monitoring solutions, including optical sensing and electrochemical instruments; and high frequency pressure and leak detection sensors to aid in burst pipe and leak events; as well as BEACON, a secure cloud-hosted software suite that establishes alerts for specific conditions and allows consumer engagement tools that permit end water customers to view and manage their water usage activity. Its flow instrumentation products are used in water/wastewater, heating, ventilating and air conditioning, and corporate sustainability markets. The company serves water utilities, commercial, and industrial industries; and provides training, project management, technical support, and other collaborative services for customers. It sells its products and software directly, as well as through resellers and representatives. The company was incorporated in 1905 and is based in Milwaukee, Wisconsin.

About Methode Electronics

Methode Electronics, Inc. designs, engineers, and produces mechatronic products worldwide. It operates through four segments: Automotive, Industrial, Interface, and Medical. The Automotive segment supplies electronic and electro-mechanical devices, and related products to automobile original equipment manufacturers directly or through their tiered suppliers. Its products include integrated center consoles, hidden and ergonomic switches, transmission lead-frames, complex insert molded solutions, LED-based lighting solutions, and sensors, which incorporate magneto-elastic sensing, eddy current, or other sensing technologies that monitor the operation or status of a component or system. The Industrial segment manufactures external lighting solutions comprising driving, work, and signal lights; industrial safety radio remote controls; braided flexible cables; current-carrying laminated and powder-coated busbars; high-voltage high current connector and contracts; custom power-product assemblies, such as PowerRail solution; and high-current low-voltage flexible power cabling systems that are used in aerospace, cloud computing, commercial vehicles, construction equipment, industrial, military, power conversion, and transportation markets and applications. The Interface segment provides various copper-based transceivers and related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets; user interface solutions for the appliance, commercial food service, and point-of-sale equipment markets; and fluid-level sensors for the marine/recreational vehicle and sump pump markets. The Medical segment offers Dabir Surfaces, a surface support technology aimed at pressure injury prevention for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures. Methode Electronics, Inc. was incorporated in 1946 and is headquartered in Chicago, Illinois.