Itron (ITRI – Nasdaq) is a key player in the automated energy and water metering business, and as such is a green play on building a smarter, more efficient electric grid and minimizing water waste. Using Itron’s products and software, utilities can better manage their systems, reducing waste and implementing more effective water and energy conservation strategies. Just 25% of U.S. electric/gas/water meters have automatic meter reading (AMR) systems, providing a huge opportunity as utilities convert to these more efficient systems from handheld meter readers.
Itron’s three businesses are Electricity Metering, Meter Data Collection and Software Solutions. Electricity Metering includes household meters, commercial and industrial meters, generation, transmission and distribution meters, and international meters. Meter Data Collection products include automatic meter reading (AMR) modules, handheld meter reading and handheld AMR, mobile AMR, fixed-network AMR, and SmartSynch Meter Systems.
Itron is the dominant market leader in AMR (55% share in North America), which is growing rapidly (~20% annually) and is an important capital spending priority for many utilities. The company’s earnings and backlog have soared since the acquisition of Schlumberger’s electric metering business last year. Meanwhile, the company has aggressively paid down the debt it took on to acquire the Schlumberger business.
Itron stock has gained over 90% in 2005 and looks fairly valued at the moment, but we think it has very bright prospects over the long term.