Seidman Investment Portfolio Organization

 

Company: Itron, Inc.
Analyst: Julie VerHage
Sector: Industrials (Nasdaq: ITRI)

Itron is one of the world's leading providers of metering, data collection and ancillary software for utilities.  The majority of Itron's business stems from Automated Meter Reading (AMR) technology which includes transmitting meters and scanning devices. Itron holds a 50% domestic and 30% worldwide market share with regards to its AMR technology.  Furthermore, Itron is the market leader for Advanced Metering Infrastructure (AMI) technology, a fully automated, wireless, programmable, and updatable metering system. As countries improve their energy standards AMR technology's importance grows significantly as it is necessary to achieve those standards. Currently, only 6% of the world's meters are AMR based, leaving plenty of room for growth. AMI is the next step in energy efficiency and cost savings. Itron has popular brand appeal and quality within the industry and continues to capture key contracts. With the passing of the AARA in 2009, the pursuit of AMI systems by the USDOE, IOUs and Demand Response firms has gained both stimulus appeal and money.

Itron lies on the lower end of the mid cap spectrum. They have seen double digit growth for the past few years, ranging from 20% to 30%, which is only bound to pick up. Year end 2008 profits neared $2 billion with an EBITDA of $282 million. They maintain a FCF of $140 million and long term debt of $1.5 billion. Although highly levered, they are in healthy condition and continue to pay down said debt ahead of schedule.

 

Things to look out for:

a) 93% institutionally owned thus more highly subject to small number of big players.

b) PE of 173, however a forward PE of 17 suggesting expected growth

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Page last modified March 11, 2012