Resource management provider Itron (NASDAQ: ITRI) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 7.2% year on year to $562.9 million. Next quarter’s revenue guidance of $595 million underwhelmed, coming in 1.4% below analysts’ estimates. Its non-GAAP profit of $1.59 per share was 23.7% above analysts’ consensus estimates.

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"Itron delivered record gross margin, earnings well ahead of our expectations, and strong free cash flow in the second quarter, with revenue in line with our outlook — clear evidence of the structurally better earnings power this team has built," 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

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Itron grew its sales at a sluggish 2.1% compounded annual growth rate. This was below our standards and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Itron’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1% annually.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Product and Service, which are 19.7% and 54.9% of revenue. Over the last two years, Itron’s Product revenue (measurement and control equipment) averaged 14.9% year-on-year declines. On the other hand, its Service revenue ( project management, installation, consulting) averaged 49.3% growth.

This quarter, Itron missed Wall Street’s estimates and reported a rather uninspiring 7.2% year-on-year revenue decline, generating $562.9 million of revenue. Company management is currently guiding for a 2.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

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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 6.8% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.

On the plus side, Itron’s operating margin rose by 20.1 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Itron generated an operating margin profit margin of 13.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

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 28% compounded annual growth rate over the last five years, higher than its 2.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Itron’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Itron’s operating margin was flat this quarter but expanded by 20.1 percentage points over the last five years. On top of that, its share count shrank by 1.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

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 23.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, Itron reported adjusted EPS of $1.59, down from $1.62 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Itron’s full-year EPS to shrink by 12.9% from $7.08 to $6.17.

Key Takeaways from Itron’s Q2 Results

We were impressed by how significantly Itron blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed and its revenue fell slightly short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 4.2% to $88.36 immediately after reporting.

Indeed, Itron had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).