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Veralto Corporation (VLTO)
NYSE:VLTO
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Veralto Corporation
(NYSE:VLTO)
68Neutral
Positive Factors
Acquisition
The acquisition of TraceGains is a strong strategic fit and represents an important step in unlocking an M&A flywheel.
Financial Performance
VLTO's resilient portfolio, strong free cash flow generation, and solid balance sheet establish it as a core holding in the materials and industrial space.
Growth Strategy
Following the spinoff from DHR, VLTO is anticipated to be very acquisitive and leverage its strong free cash flow for growth in the coming years.
Negative Factors
Stock Performance
The stock is underperforming compared to R2K, reflective of a high bar entering the quarter.
Valuation
Valuation is more reasonable compared to late 2024 highs, but doesn't provide obvious upside until more pronounced growth or deployment magnitude is seen.
Veralto Corporation (VLTO) vs. S&P 500 (SPY)
Market Cap
$23.77B
Dividend Yield0.4%
Average Volume (3M)1.46M
Price to Earnings (P/E)28.8
Beta (1Y)0.71
Revenue Growth3.43%
EPS Growth-1.15%
CountryUS
Employees16,500
SectorIndustrials
Sector Strength65
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)3.34
Shares Outstanding247,550,640
10 Day Avg. Volume1,303,630
30 Day Avg. Volume1,463,814
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.66
Price to Cash Flow (P/CF)21.20
P/FCF Ratio21.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$110.83Price Target Upside15.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Veralto Corporation Business Overview & Revenue Model
Company DescriptionVeralto Corporation provides water analytics, water treatment, marking and coding, and packaging and color solutions worldwide. It operates through two segments, Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment offers precision instrumentation and water treatment technologies to measure, analyze, and treat water in residential, commercial, municipal, industrial, research, and natural resource applications under the Hach, Trojan Technologies, ChemTreat and other brands. This segment also provides water solutions, including chemical reagents, services, and digital solutions. The PQI segment offers marking and coding for packaged goods and related consumables; a software solution that provides digital asset management, marketing resource management, and product information management; inline printing solutions for products and packaging with marking and coding systems; design software and imaging systems for the creation of new packaging designs; color management solutions for printed packages and consumer and industrial products; and color standard services for the design industry. This segment sells its products and services through the Videojet, Linx, Esko, X-Rite, and Pantone brands. The company serves industries, such as municipal utilities, food and beverage, pharmaceutical, and industrials. The company was formerly known as DH EAS Holding Corp. and changed its name to Veralto Corporation in February 2023. Veralto Corporation was incorporated in 2022 and is headquartered in Waltham, Massachusetts.
How the Company Makes MoneyVeralto Corporation generates revenue primarily through the sale of its advanced technology products and solutions across different sectors. The company's key revenue streams include the sales of analytical instruments, monitoring equipment, and safety solutions, which are critical for industries requiring precision and compliance. Additionally, Veralto offers comprehensive service and maintenance packages, providing ongoing support and generating recurring income. Strategic partnerships and collaborations with industry leaders further enhance its market reach and contribute to its earnings by expanding its customer base and offering cutting-edge solutions.
Veralto Corporation Financial Statement Overview
Summary
Veralto Corporation demonstrates robust financial health with strong revenue growth, efficient operations, and solid cash generation. The company maintains a healthy balance sheet with manageable leverage and efficient use of equity. However, slight weaknesses in net income and increasing liabilities should be monitored. Overall, Veralto is well-positioned within the industrial goods sector.Income Statement
The company shows strong financial performance with a consistent revenue growth rate of 3.43% from 2023 to TTM, driven by solid EBIT and EBITDA margins at 23.26% and 24.16% respectively in TTM. The gross profit margin is also robust at 59.81%. However, a slight decline in net income from 2023 to TTM indicates a potential pressure on net profit margin, which stands at 16.04%.87
Very Positive
Balance Sheet
Veralto Corporation maintains a healthy debt-to-equity ratio of 1.27, suggesting manageable leverage. The equity ratio is stable at 31.91% in TTM, reflecting a solid equity base. Return on equity is impressive at 40.74%, highlighting efficient use of equity. Nonetheless, the company's total liabilities have increased, which warrants monitoring.78
Positive
Cash Flow
The company displays strong cash generation with an operating cash flow to net income ratio of 1.05 in TTM, indicating efficient conversion of income to cash. Free cash flow remains stable, although it experienced a slight decline from 2023 to TTM. The free cash flow to net income ratio is high at 0.98, showcasing healthy cash management, despite a reduction in operating cash flow from the previous year.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.19B | 5.02B | 4.88B | 4.70B | 4.35B | Gross Profit |
| 3.10B | 2.90B | 2.77B | 2.71B | 2.51B | EBIT |
| 1.21B | 1.14B | 1.08B | 1.04B | 951.00M | EBITDA |
| 1.21B | 1.21B | 1.21B | 1.15B | 1.06B | Net Income Common Stockholders |
| 833.00M | 839.00M | 845.00M | 861.00M | 724.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.10B | 762.00M | -123.00M | -135.00M | 0.00 | Total Assets |
| 6.41B | 5.69B | 4.83B | 4.84B | 0.00 | Total Debt |
| 2.60B | 2.78B | 123.00M | 135.00M | 0.00 | Net Debt |
| 1.50B | 2.02B | 246.00M | 270.00M | 0.00 | Total Liabilities |
| 4.36B | 4.30B | 1.58B | 1.64B | 0.00 | Stockholders Equity |
| 2.04B | 1.38B | 3.23B | 3.20B | 0.00 |
| Cash Flow | Free Cash Flow | |||
| 820.00M | 909.00M | 836.00M | 842.00M | 965.00M | Operating Cash Flow |
| 875.00M | 963.00M | 870.00M | 896.00M | 1.00B | Investing Cash Flow |
| -434.00M | -55.00M | -89.00M | -97.00M | -157.00M | Financing Cash Flow |
| -65.00M | -135.00M | -781.00M | -799.00M | -844.00M |
Veralto Corporation Technical Analysis
Negative
96.04
Price Trends
99.35
Negative
101.61
Negative
103.60
Negative
Market Momentum
-0.57
Positive
46.68
Neutral
30.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VLTO, the sentiment is Negative. The current price of 96.04 is below the 20-day moving average (MA) of 97.85, below the 50-day MA of 99.35, and below the 200-day MA of 103.60, indicating a bearish trend. The MACD of -0.57 indicates Positive momentum. The RSI at 46.68 is Neutral, neither overbought nor oversold. The STOCH value of 30.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VLTO.
Veralto Corporation Risk Analysis
Veralto Corporation disclosed 35 risk factors in its most recent earnings report. Veralto Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Veralto Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $21.52B | 33.80 | 42.82% | ― | 0.07% | -1.20% | |
70 Outperform | $188.69B | 30.24 | 13.15% | 0.31% | 0.05% | 6.87% | |
68 Neutral | $23.77B | 28.78 | 48.70% | 0.40% | 3.43% | -1.15% | |
68 Neutral | $33.27B | 26.82 | 20.61% | 0.82% | -3.00% | 3.67% | |
65 Neutral | $146.67B | 38.76 | 7.57% | 0.52% | -13.50% | -17.25% | |
62 Neutral | $8.05B | 13.60 | 4.04% | 3.11% | 3.70% | -14.19% | |
58 Neutral | $6.38B | 55.62 | 7.16% | 0.47% | 13.56% | -73.92% |
* Industrials Sector Average
Performance Comparison
VLTO
Veralto Corporation
97.45
10.26
11.77%
A
Agilent
116.98
-27.81
-19.21%
BRKR
Bruker
41.74
-50.87
-54.93%
DHR
Danaher
205.00
-41.62
-16.88%
TMO
Thermo Fisher
497.60
-78.17
-13.58%
WAT
Waters
368.57
24.06
6.98%
Veralto Corporation Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -4.78% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Veralto's strong financial performance and strategic growth initiatives, including record sales, innovative product launches, and successful acquisitions. However, challenges in the China market and currency headwinds posed concerns for the company. Despite these lowlights, the overall sentiment remains positive due to strong execution and financial performance.Highlights
Record Sales Achievement
Total sales grew 3.4% year-over-year to just under $5.2 billion, marking an all-time high for the company.
Strong Financial Performance
Exceeded initial guidance on core sales growth, operating profit margin expansion, and adjusted earnings per share growth, with a full-year EPS growth of 11% to $3.54 per share.
Water Quality Segment Success
Water Quality segment achieved 3.9% core sales growth and 50 basis points of adjusted operating profit margin expansion, with annual sales over $3 billion.
PQI Segment Milestone
PQI delivered 3.3% core sales growth with 160 basis points of adjusted operating profit margin expansion, reaching over $2 billion in sales.
Innovative Product Launches
Videojet launched the 7920 UV Laser Marking System with strong customer demand and enthusiasm, optimizing coding for fast-growing packaging substrates.
Strategic Acquisitions and Investments
Acquired TraceGains and invested in Axine Water Technologies, enhancing portfolio with innovative solutions and expanding digital offerings.
Lowlights
China Market Challenges
Continued low sales levels in China, with no expected growth in 2025 due to soft demand for Water Quality products and lower installations for chip processing.
Currency Headwinds
Currency resulted in approximately $25 million headwind to sales and $7 million to adjusted operating profit in Q4, impacting earnings per share by $0.02.
TraceGains Margin Impact
TraceGains acquisition was 70 basis points dilutive to PQI's margins in Q4, affecting overall segment profitability.
Company Guidance
During Veralto Corporation's Fourth Quarter 2024 earnings call, the company provided guidance for 2025, targeting low to mid-single-digit core sales growth, with an emphasis on strong incremental margins and solid earnings growth. The guidance anticipates adjusted EPS in the range of $3.60 to $3.70, with a planned 25 to 50 basis points improvement in adjusted operating profit margin. The company expects currency to be a 2% headwind to sales and a $0.08 headwind to adjusted earnings per share. Additionally, Veralto aims for a free cash flow conversion between 90% to 100% of GAAP net income, with CapEx in the range of 1% to 1.5% of sales. The first quarter of 2025 is expected to continue the trend with core sales growth in low to mid-single digits across both segments, an adjusted operating profit margin between 24% to 24.5%, and adjusted EPS guidance of $0.84 to $0.88 per share.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.