Resource management provider Itron (NASDAQ: ITRI) reported Q3 CY2025 results topping the market’s revenue expectations, but sales fell by 5.5% year on year to $581.6 million. On the other hand, next quarter’s revenue guidance of $560 million was less impressive, coming in 4.4% below analysts’ estimates. Its non-GAAP profit of $1.54 per share was 4.3% above analysts’ consensus estimates.

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"Itron delivered third quarter results with record margin, profitability, and cash flow," said Tom Deitrich, Itron’s president and CEO.

Company Overview

Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Itron grew its sales at a weak 1.1% compounded annual growth rate. This wasn’t a great result, but there are still things to like about Itron.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Itron’s annualized revenue growth of 8% over the last two years is above its five-year trend, suggesting some bright spots. We also think Itron’s is one of the better Inspection Instruments businesses as many of its peers faced declining sales because of cyclical headwinds.

Itron also breaks out the revenue for its most important segments, Product and Service, which are 85% and 15% of revenue. Over the last two years, Itron’s Product revenue (measurement and control equipment) averaged 9.4% year-on-year growth while its Service revenue ( project management, installation, consulting) averaged 5.2% growth.

This quarter, Itron’s revenue fell by 5.5% year on year to $581.6 million but beat Wall Street’s estimates by 0.6%. Company management is currently guiding for a 8.6% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.9% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Operating Margin

Itron was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.4% was weak for an industrials business.

On the plus side, Itron’s operating margin rose by 9.3 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Itron generated an operating margin profit margin of 14.1%, up 2 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Itron’s EPS grew at an astounding 25.6% compounded annual growth rate over the last five years, higher than its 1.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Itron’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Itron’s operating margin expanded by 9.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Itron, its two-year annual EPS growth of 46% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Itron reported adjusted EPS of $1.54, down from $1.84 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.3%. Over the next 12 months, Wall Street expects Itron’s full-year EPS of $6.03 to stay about the same.

Key Takeaways from Itron’s Q3 Results

We were impressed by Itron’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. On the other hand, its revenue guidance for next quarter missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $137.90 immediately following the results.

So should you invest in Itron right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.