Itron Inc

Itron has demonstrated strong margin progression at recent results, positioning it well within the sustainable energy sector. The company has a heritage in manufacturing smart meters and is increasingly providing services and consulting to utilities around this installed base to enable more efficient use of the grid. This aligns with the broader trend of electrification and efficiency improvements in energy demand, which we believe will continue to grow.

Itron (ITRI) was a new addition to our Small Cap Value portfolio in Q2 2026. Itron is the leading provider of utility meter solutions providing intelligent grid infrastructure hardware, software, and analytics. Over the last several years, Itron management has focused on leveraging Itron’s leading market position in smart meter hardware to build a more consistent, higher-margin recurring business. Itron has seen strong customer demand within the Outcomes segment, growing revenues 22.1% Y/Y last quarter and now representing 16% of total revenues. Management anticipates the Outcomes segment to continue to grow as a percentage of revenues and increase overall profitability. Trading at roughly 12x 2027 EPS estimates, we believe the transition from a cyclical hardware provider to a faster growth and more consistent recurring revenue model will drive multiple expansion and upside for ITRI.

Itron (ITRI), the smart metering company, caught our attention because of its failure to participate in the utility spending tailwind as many bulls had expected. Over the past several years, Itron has pursued an aggressive acquisition strategy aimed at expanding its addressable market and diversifying its revenue base. However, results have consistently disappointed. We believe that the disconnect is structural rather than cyclical. Utilities typically treat metering upgrades as routine maintenance rather than transformative capital investment, which is a very different narrative to the one Itron has been selling. The most recent quarter confirmed our thesis: Itron missed again, citing the same lumpiness and timing issues. We consider the stock overvalued relative to its industrial peers given revenue growth near flat, EBITDA margins in the mid-teens, and an EV/EBITDA multiple above 11x.