ESCO Technologies (NYSE: ESE) and Badger Meter (NYSE:BMI) are both small-cap industrial products companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitabiliy, institutional ownership, dividends and analyst recommendations.
Analyst Ratings
This is a summary of current ratings for ESCO Technologies and Badger Meter, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ESCO Technologies | 0 | 1 | 3 | 0 | 2.75 |
| Badger Meter | 0 | 2 | 1 | 0 | 2.33 |
ESCO Technologies currently has a consensus price target of $57.67, indicating a potential downside of 5.70%. Badger Meter has a consensus price target of $44.50, indicating a potential downside of 0.56%. Given Badger Meter’s higher probable upside, analysts plainly believe Badger Meter is more favorable than ESCO Technologies.
Dividends
ESCO Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. Badger Meter pays an annual dividend of $0.46 per share and has a dividend yield of 1.0%. ESCO Technologies pays out 16.6% of its earnings in the form of a dividend. Badger Meter pays out 39.3% 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 raised its dividend for 15 consecutive years. Badger Meter is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares ESCO Technologies and Badger Meter’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| ESCO Technologies | $607.24 million | 2.60 | $105.50 million | $1.93 | 31.68 |
| Badger Meter | $395.15 million | 3.30 | $77.75 million | $1.17 | 38.25 |
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.
Volatility & Risk
ESCO Technologies has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Badger Meter has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.
Insider & Institutional Ownership
97.6% of ESCO Technologies shares are owned by institutional investors. Comparatively, 84.3% of Badger Meter shares are owned by institutional investors. 2.3% of ESCO Technologies shares are owned by insiders. Comparatively, 4.5% of Badger Meter shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Profitability
This table compares ESCO Technologies and Badger Meter’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ESCO Technologies | 8.29% | 8.42% | 5.13% |
| Badger Meter | 8.67% | 13.19% | 9.52% |
Summary
Badger Meter beats ESCO Technologies on 9 of the 17 factors compared between the two stocks.
About ESCO Technologies
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.
About Badger Meter
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.
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