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Is ITRI a good stock to buy? We came across a bullish thesis on Itron, Inc. on Darren Leung’s Substack. In this article, we will summarize the bulls’ thesis on ITRI. Itron, Inc.'s share was trading at $94.16 as of April 21st. ITRI’s trailing and forward P/E were 15.02 and 16.08 respectively according to Yahoo Finance.
Itron, Inc., a technology, solutions, and service company, provides end-to-end solutions that help manage energy, water, and smart city operations worldwide. ITRI is being mispriced by the market as a predominantly hardware utility infrastructure company, despite housing a rapidly scaling software and outcomes business that is increasingly driving its fundamental re-rating potential.
Within Itron sits an approximately $368M annual recurring revenue (ARR) software layer, growing 20% year-over-year, alongside an Outcomes segment generating roughly $360M of recurring revenue with 22% growth and ~41.7% adjusted gross margins.
A newly formed Resiliency Solutions segment, including Urbint and Locusview, further strengthens the profile with ~76% gross margins in its early contribution phase. Despite this high-quality, fast-growing recurring revenue base, the market implicitly values Itron’s combined software layer at roughly 8× ARR, a level materially below comparable software peers.
Based on a ~$5.1B enterprise value and conservative hardware valuation assumptions, the implied software valuation ranges between 7×–10× ARR, still significantly lagging infrastructure software companies such as Samsara trading above 15× ARR and historical leaders like Veeva Systems, which reached much higher multiples during comparable growth phases.
The mispricing persists due to delayed adoption of ARR as a formal reporting metric, limited analyst model restructuring, and the absence of a clean separation of software economics in consensus frameworks. Structurally, this is compounded by the recent emergence of Resiliency Solutions and the cross-sell opportunity into Itron’s 8,000+ utility customer base, enabling low-cost revenue expansion at scale.
Fundamentally, demand is non-discretionary and driven by regulated global grid modernization programs across Europe and the UK, ensuring durable visibility and insulation from typical enterprise software cyclicality. With a $1B+ backlog growing 58% year-over-year, accelerating pipeline metrics, and consistent earnings beats, Itron is positioned for a material re-rating.
A forthcoming Investor Day, expected to reset long-term targets after early achievement of FY2027 goals, acts as a powerful catalyst, potentially forcing market recognition of a high-margin, high-growth software compounder embedded within a misclassified industrial name.
Previously, we covered a bullish thesis on Badger Meter, Inc. (BMI) by Durable Value Creators in November 2024, which highlighted its smart water ecosystem, AMI adoption, and software-led margin expansion through BEACON and RADAR platforms. BMI’s stock price has depreciated by approximately 44.85% since our coverage, driven by valuation compression following a period of elevated multiples, alongside growth normalization and factor rotation, rather than any material deterioration in fundamentals. Darren Leung shares a similar view but emphasizes Itron, Inc. (ITRI)’s mispriced ARR software layer and Investor Day catalyst. Both theses focus on utility digitization and recurring revenue within infrastructure businesses.
Itron, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held ITRI at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of ITRI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ITRI and that has 10,000% upside potential, check out our report about this cheapest AI stock.