Is ITRI an excellent inventory to purchase? We got here throughout a bullish thesis on Itron, Inc. on Darren Leung’s Substack. On this article, we’ll summarize the bulls’ thesis on ITRI. Itron, Inc.’s share was buying and selling at $94.16 as of April twenty first. ITRI’s trailing and ahead P/E had been 15.02 and 16.08 respectively in line with Yahoo Finance.
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Itron, Inc., a know-how, options, and repair firm, supplies end-to-end options that assist handle vitality, water, and sensible metropolis operations worldwide. ITRI is being mispriced by the market as a predominantly {hardware} utility infrastructure firm, regardless of housing a quickly scaling software program and outcomes enterprise that’s more and more driving its elementary re-rating potential.
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Inside Itron sits an roughly $368M annual recurring income (ARR) software program layer, rising 20% year-over-year, alongside an Outcomes section producing roughly $360M of recurring income with 22% development and ~41.7% adjusted gross margins.
A newly fashioned Resiliency Options section, together with Urbint and Locusview, additional strengthens the profile with ~76% gross margins in its early contribution part. Regardless of this high-quality, fast-growing recurring income base, the market implicitly values Itron’s mixed software program layer at roughly 8× ARR, a stage materially beneath comparable software program friends.
Based mostly on a ~$5.1B enterprise worth and conservative {hardware} valuation assumptions, the implied software program valuation ranges between 7×–10× ARR, nonetheless considerably lagging infrastructure software program firms similar to Samsara buying and selling above 15× ARR and historic leaders like Veeva Methods, which reached a lot larger multiples throughout comparable development phases.
The mispricing persists as a consequence of delayed adoption of ARR as a proper reporting metric, restricted analyst mannequin restructuring, and the absence of a clear separation of software program economics in consensus frameworks. Structurally, that is compounded by the latest emergence of Resiliency Options and the cross-sell alternative into Itron’s 8,000+ utility buyer base, enabling low-cost income enlargement at scale.
Essentially, demand is non-discretionary and pushed by regulated international grid modernization applications throughout Europe and the UK, making certain sturdy visibility and insulation from typical enterprise software program cyclicality. With a $1B+ backlog rising 58% year-over-year, accelerating pipeline metrics, and constant earnings beats, Itron is positioned for a fabric re-rating.