Itron Hits 52-Week High On Upbeat Preliminary Q1 Results

On May 24, 2016, shares of Itron, Inc. (NASDAQ:ITRI) scaled a new 52-week high of $43.61, before closing a notch lower at $43.50. The high came on the back of Itron’s preliminary first-quarter operating results, which revealed a consistently strong business momentum and improved operational performance across all segments as well as the clinching of the Avista deal.

This Zacks Rank #3 (Hold) stock has seen its share price move up 1.9% in the past four weeks and delivered a year-to-date return of 17%. Average volume of shares traded over the last three months is approximately 251K.

Based in Liberty Lake, WA, the company provides metering solutions to electricity, gas, and water utility markets globally. It has a market cap of $1.65 billion and a long-term estimated earnings per share growth rate of 14%.

Growth Drivers

Itron’s shares have been rising since May 3, 2016, with the announcement of its preliminary operating results for the first quarter as well as the confirmation of the Avista deal. Itron reported a 28% year-over-year surge in advanced and smart meters and module volumes in the quarter. The company witnessed the highest shipment of electric smart meters in the last 14 quarters as well as record gas smart meter shipments. Water meter and module shipments were also up 17% sequentially.

A favorable product mix in North America and a strong order pipeline continue to provide tailwinds to the Electricity segment. The Gas segment is equipped with a strong sales pipeline, particularly in North America. Further, the Water segment’s sales pipeline reflects continued deployment of smart water projects globally.

For 2016, Itron expects earnings per share in the range of $1.95–$2.25 on revenues of $1.85–$1.95 billion. Significant backlog growth, benefits from restructuring and efficiency projects and the Itron OpenWay Riva next-generation platform are expected to drive revenue growth and improve profitability throughout the year.

Itron also announced that Avista has selected Itron’s OpenWay Riva IoT solution to modernize its electric and gas network in the state of Washington and lay the foundation for smart city applications. Avista provides energy services and electricity to 375,000 customers and natural gas to 335,000 customers in eastern Washington, northern Idaho, and parts of southern and eastern Oregon.

Itron is focused on implementing its restructuring initiatives rigorously. It executed over 50% of workforce reductions under the plan by the end of 2015 and expects to complete 95% by the end of this year. The company expects these reductions to deliver $40 million in annualized savings post completion.

The Zacks Consensus Estimate for Itron has moved up 2% for 2016 and 3% for 2017. The Zacks Consensus Estimate for 2016 is currently pegged at $212, reflecting 109.90% year-over-year growth, while that for 2017 stands at $2.50, representing 17.85% growth.

Stocks to Consider

Some better-ranked stocks in the same sector worth considering are Agilent Technologies, Inc. (NYSE:A) , ADTRAN, Inc. (NASDAQ:ADTN) , Cognex Corporation (NASDAQ:CGNX) . All three stocks carry a Zacks Rank #2 (Buy).

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