Veralto

Financial Performance

5Y price score: 25

10Y return: 19.7%

DATE RANGE:

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80.0

52-week range

105.7

96.48

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Required return / cost of capital

FCFF terminal growth rate

Your fair value & Margin of safety

To calculate fair value based on cost of capital and terminal growth assumptions above, please select free cash flow forecast.

Forecast:

Valuation

Free Cash Flow Yield

4.4 %

Dividend Yield TTM

0.5 %

Market cap $

$ 23,521

Price / Earnings TTM

24.4

Price / Book TTM

7.6

PEG TTM

1.9

Earnings growth and return

LTM

5YR

10YR

Total return (price & dividends)

(6.8) %

20.9 %

19.7 %

Free cash flow per share growth

135 %

3.3 %

Earnings per share growth

8.9 %

27.9 %

Founded: 2,023

Employees: 17,000

Business Summary:Veralto Corporation is a global provider specializing in critical solutions across water quality management, brand protection, and packaging aesthetics. Its operations are structured into two primary divisions: Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment delivers advanced instrumentation and treatment technologies designed for the precise measurement, analysis, and purification of water. These solutions cater to a broad spectrum of applications, from residential and commercial settings to municipal systems, industrial processes, research facilities, and natural environments. Esteemed brands like Hach, Trojan Technologies, and ChemTreat fall under this segment, which also supplies essential chemical reagents, support services, and digital tools for comprehensive water management. The PQI segment focuses on enhancing product integrity and brand appeal. It provides critical marking and coding systems for packaged consumer goods and associated consumables. Its offerings extend to comprehensive software for managing digital assets, marketing resources, and product information, alongside inline printing systems for direct application on products and packaging. Furthermore, PQI supplies sophisticated design software and imaging technology for innovative packaging development, as well as color management tools for both printed materials and a wide array of consumer and industrial products. The segment also establishes color standards crucial for the design sector, operating through well-known brands such as Videojet, Linx, Esko, X-Rite, and Pantone. Veralto's diverse clientele includes municipal utility providers, the food and beverage sector, pharmaceutical companies, and various industrial enterprises. Established in 2022, Veralto Corporation, which was previously known as DH EAS Holding Corp. before adopting its current name in February 2023, maintains its corporate headquarters in Waltham, Massachusetts.

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Fair Value Reference Estimate

Latest Earnings Call Takeaways

2026 Q2 (Jul 29, 2026)

1) Financial Performance Highlights
- Total sales increased by 7.6% YoY.
- Adjusted EPS rose by 19.4% YoY, with guidance now set at $4.35 to $4.43 per share for the full year, indicating 12% to 14% growth YoY.
- Free cash flow generated was $328 million.
- Core sales growth was 4.2%, driven by Water Quality at 5.7% and PQI at 2%.

2) Strategic Initiatives and Acquisitions
- Recent acquisition of Alfaa UV, a leader in UV water treatment in India, expected to enhance growth in the water segment.
- Continued focus on bolt-on acquisitions and opportunistic share repurchases, with over 5 million shares repurchased for approximately $480 million this year.
- Emphasis on disciplined capital allocation and long-term value creation through strategic investments.

3) Market Drivers and Growth Outlook
- Anticipated core sales growth of 5% to 6% in the second half of the year, driven by strong industrial market demand, particularly in data centers and water recycling solutions.
- Positive momentum in digital workflow solutions for PQI, with strong demand for product compliance and traceability.
- Expectation of balanced growth across equipment and consumables in both segments.

4) Operational Efficiency and Cost Management
- Ongoing cost optimization program is on track, with minor savings expected in Q4 but significant benefits projected for 2027.
- Margin expansion of approximately 25 basis points expected in Q3, with a total annual expansion of 25 to 50 basis points.
- Focus on maintaining dollar margins amid volatile input costs, particularly in the ChemTreat segment.

5) Challenges and Market Dynamics
- The company is navigating challenges related to input cost volatility, particularly in the ChemTreat segment, but has not seen significant material impacts.
- No further IEEPA tariff refunds are included in the guidance for the second half of the year, although potential exists for additional benefits.
- The high-growth markets are showing mixed results, with strong demand in PQI but some delays in water projects, particularly in China and Latin America.

Bottom line: Veralto Corporation is demonstrating solid financial performance with strong growth drivers in both segments, supported by strategic acquisitions and disciplined capital allocation. The company is well-positioned for continued growth, although it faces challenges related to cost volatility and market dynamics in certain regions.

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