Itron (ITRI) Scales New 52-Week High On Healthy Prospects

On Jun 6, 2016, shares of Itron, Inc. (NASDAQ:ITRI) scaled a new 52-week high of $45.20, before closing a notch lower at $45.13. Shares continued to rally on the back of the company’s growth momentum as well as the Avista deal.

This Zacks Rank #3 (Hold) stock has seen its share price gained 6.7% in the past four weeks, delivering a year-to-date return of 22.91%. Average volume of shares traded over the last three months is approximately 211K.

Based in Liberty Lake, WA, the company provides metering solutions to electricity, gas and water utility markets globally. It has a market cap of $1.71 billion and a long-term estimated earnings per share growth rate of 14%.

Growth Drivers

Itron’s shares have been on an uptrend since May 3, 2016, when the company announced preliminary operating results for the first quarter as well as the confirmation of the Avista deal. Advanced and smart meters and module volumes saw a 28% year-over-year surge in the quarter and the company witnessed the record shipment volumes of electric smart meters in the last 14 quarters and gas smart meters. Water meters 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 boasts a strong sales pipeline, particularly in North America. The Water segment’s sales pipeline reflects continued global deployment of smart water projects.

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 revenues and improve profitability throughout the year.

Itron also announced that Avista has selected its 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. The company 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).