Veralto Corporation (VLTO) AI Stock Analysis

• Market Cap: $22.23B
• Dividend Yield: 0.46%
• Average Volume (3M): 1.57M
• Price to Earnings (P/E): 26.9
• Beta (1Y): 0.69
• Revenue Growth: 3.43%
• EPS Growth: -1.15%
• Country: US
• Employees: 16,500
• Sector: Industrials
• Sector Strength: 65
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.95
• Shares Outstanding: 248,051,760
• 10 Day Avg. Volume: 1,919,447
• 30 Day Avg. Volume: 1,566,752
• PEG Ratio: N/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 Ratio: 21.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $104.67
• Price Target Upside: 20.03% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Veralto Corporation exhibits strong financial performance with robust revenue growth and solid cash generation, offset by a bearish technical outlook and modest valuation metrics. The positive sentiment from recent earnings calls, highlighting strategic growth and record sales, supports a favorable long-term outlook despite current market challenges.

Positive Factors

Acquisitions

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.

Financial Performance

Veralto's 3Q results modestly beat expectations, and 2024 guidance was raised with levers for upside.

Market Position

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.

Negative Factors

Stock Performance

The stock is underperforming compared to R2K, reflective of a high bar entering the quarter.

Valuation

Valuation is more reasonable today vs. late 2024 highs, but doesn't provide obvious upside until more of a pronounced inflection in growth or deployment magnitude is seen.

Veralto Corporation Business Overview & Revenue Model

Company Description

Veralto 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 Money

Veralto Corporation makes money through its diverse portfolio of products and services, primarily in the industrial technology sector. The company generates revenue by selling advanced measurement and analysis equipment, water quality systems, and other related technologies to businesses across a wide range of industries. Key revenue streams include direct sales of products, long-term service contracts, and recurring revenues from software and maintenance services. Veralto's strategic partnerships with key players in various industries, along with its focus on innovation and quality, contribute significantly to its earnings and market presence.

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%.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 87.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 87.2 is below the 20-day moving average (MA) of 92.17, below the 50-day MA of 96.01, and below the 200-day MA of 103.01, indicating a bearish trend. The MACD of -2.39 indicates Positive momentum. The RSI at 41.48 is Neutral, neither overbought nor oversold. The STOCH value of 60.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VLTO.

Veralto Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FSS	78 Outperform	$4.44B	20.74	19.77%	0.67%	8.06%	36.93%
ZWS	74 Outperform	$5.01B	32.37	9.96%	1.15%	2.35%	44.23%
ERII	71 Outperform	$804.00M	36.60	10.73%	―	12.93%	7.08%
VLTO	68 Neutral	$22.23B	26.85	48.70%	0.46%	3.43%	-1.15%
ATMU	64 Neutral	$2.74B	14.93	120.48%	0.47%	2.55%	8.40%
Sector *	62 Neutral	$4.16B	11.31	5.46%	215.65%	4.12%	-8.47%
PCT	38 Underperform	$998.43M	―	-96.27%	―	―	-180.10%