Financial Analysis: ePlus (NASDAQ:PLUS) and Badger Meter (NYSE:BMI)

Badger Meter (NYSE:BMI – Get Free Report) and ePlus (NASDAQ:PLUS – Get Free Report) are both mid-cap technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Dividends

Badger Meter pays an annual dividend of $1.76 per share and has a dividend yield of 1.4%. ePlus pays an annual dividend of $1.08 per share and has a dividend yield of 1.2%. Badger Meter pays out 41.1% of its earnings in the form of a dividend. ePlus pays out 23.6% 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. Badger Meter is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

89.0% of Badger Meter shares are owned by institutional investors. Comparatively, 93.8% of ePlus shares are owned by institutional investors. 1.0% of Badger Meter shares are owned by company insiders. Comparatively, 2.2% of ePlus shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Badger Meter and ePlus, as provided by MarketBeat.com.

Badger Meter currently has a consensus target price of $162.00, indicating a potential upside of 25.00%. Given Badger Meter’s stronger consensus rating and higher probable upside, analysts clearly believe Badger Meter is more favorable than ePlus.

Profitability

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

Earnings & Valuation

This table compares Badger Meter and ePlus”s top-line revenue, earnings per share (EPS) and valuation.

Badger Meter has higher earnings, but lower revenue than ePlus. ePlus 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

Badger Meter has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, ePlus has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Summary

Badger Meter beats ePlus on 11 of the 17 factors compared between the two stocks.

About Badger Meter

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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 ePlus

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ePlus inc., together with its subsidiaries, provides information technology (IT) solutions that enable organizations to optimize their IT environment and supply chain processes in the United States and internationally. It operates through two segments, Technology and Financing. The Technology segment offers hardware, perpetual and subscription software, maintenance, software assurance, and internally provided and outsourced services; managed services or infrastructure and cloud; and enhanced maintenance support, service desk, storage-as-a-service, cloud hosted and managed, and managed security services; and professional, staff augmentation, cloud consulting, consulting, and security services. The Financing segment engages in financing arrangements, such as sales-type and operating leases; loans and consumption-based financing arrangements; and underwriting, management, and disposal of IT equipment and assets. Its financing operations comprise sales, pricing, credit, contracts, accounting, and risk and asset management. This segment primarily finances IT, communication-related, and medical equipment; and industrial machinery and equipment, office furniture and general office equipment, transportation equipment, and other general business equipment directly, as well as through vendors. The company serves commercial entities, state and local governments, government contractors, healthcare, and educational institutions. The company was formerly known as MLC Holdings, Inc. and changed its name to ePlus inc. in 1999. ePlus inc. was founded in 1990 and is headquartered in Herndon, Virginia.