VLTO

Industrials

Veralto

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2021–2025(5yr)

Revenue

Net Income

Free CF

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$4.7B	$4.9B	$5.0B	$5.2B	$5.5B	+6.0%
Gross Profit	$2.7B	$2.8B	$2.9B	$3.1B	$3.3B	+6.2%
Gross Margin	57.7%	56.7%	57.8%	59.8%	59.9%	+0.2pp
Operating Income	$1.0B	$1.1B	$1.1B	$1.2B	$1.3B	+5.7%
Operating Margin	22.1%	22.8%	22.7%	23.3%	23.2%	-0.1pp
Net Income	$861.0M	$845.0M	$839.0M	$833.0M	$940.0M	+12.8%
Net Margin	18.3%	17.4%	16.7%	16.0%	17.1%	+1.0pp
Free Cash Flow	$842.0M	$836.0M	$909.0M	$820.0M	$1.0B	+23.7%
FCF Margin	17.9%	17.2%	18.1%	15.8%	18.4%	+2.6pp
EPS (Diluted)	$3.50	$3.43	$3.40	$3.34	$3.76	+12.6%

Total Debt$2.7B

Cash & Equiv.$2.0B

Net Debt$642.0M

3 min read

1. THE BIG PICTURE

Veralto is an efficiency engine that converts a massive installed base of water and product sensors into high-margin recurring cash flow. By anchoring its business in the Veralto Enterprise System (VES), Veralto has moved beyond simple manufacturing to become a critical service provider for regulated industries, ensuring its durability even when new equipment sales fluctuate.

2. WHERE THE RISKS HIT HARDEST

Veralto’s "large installed base of instruments" is its primary competitive moat, but this strength is threatened by "technological obsolescence" and the "early stages of AI deployment" (10-K Item 1, Risks). If Veralto fails to commercialize AI-driven innovations quickly, it risks losing the long-term customer dependency that drives its 61% recurring revenue. Furthermore, its "close and long-term connectivity to customers" is physically vulnerable to "trade restrictions and tariffs," as 56% of sales are generated outside the U.S. (10-K Item 1, Risks). A trade war would not just increase costs; it could sever the local service and consumable links that sustain its most profitable business lines.

3. WHAT THE NUMBERS SAY TOGETHER

Veralto is the most efficient operator in its peer group, ranking first in both operating margin (23.4%) and net margin (16.7%) (XBRL). While its 6.0% revenue growth also leads the group, management’s 2026 guidance for "flat to low-single digits" core sales growth in the first quarter suggests a cooling period compared to the 3.8% growth seen in the most recent quarter (8-K). This expected deceleration aligns with management's caution regarding a "dynamic macro-economic environment." Despite the heavy $2.7 billion debt load, Veralto’s 17.3% free cash flow margin is the second-highest among peers, providing the liquidity needed to fund the $750 million share repurchase program established in late 2025 (8-K).

4. IS IT WORTH IT AT THIS PRICE?

At 20.2x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Veralto is priced almost exactly in line with the peer median of 20.3x (Peer Table). The market is currently pricing in 5.6% long-term growth (CAPM analysis). This expectation is well-supported by Veralto’s 6.0% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth and its superior net margins, which are significantly higher than peers like Xylem (9.6%) or Ingersoll Rand (7.2%). However, the valuation is sensitive to any slip in execution: if long-term growth expectations fall to 5.0%, the justified multiple would drop to 17.9x. The current price is a fair reflection of a company that leads its sector in profitability, provided it can navigate the "intense competition" and "pricing pressures" cited in its risk disclosures.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if 2026 core sales growth fails to reach the "low-to-mid-single digits" full-year target, which would suggest that "global economic sensitivity" is finally lengthening sales cycles (8-K, Risks).
Constructive if the acquisition of In-Situ or the integration of TraceGains results in a measurable expansion of the recurring revenue percentage beyond the current 61%, further insulating Veralto from capital expenditure cycles (10-K Item 1, 8-K).

6. BOTTOM LINE

Structural Advantage: High switching costs created by a massive installed base of proprietary instruments that lock in a 61% recurring revenue stream from consumables and software. Bottom Line: Veralto is a best-in-class operator trading at a fair price, though its heavy international footprint makes it a high-stakes bet on the continued stability of global trade.

Source: Synthesis · LLM Analysis

3 min read

1. Top 5 Material Risks

Global Economic Sensitivity: Veralto is vulnerable to slower economic growth, inflation, and reduced capital expenditures, which can lead to longer sales cycles, order cancellations, and increased difficulty in collecting accounts receivable.
Trade Restrictions and Tariffs: The U.S. government’s imposition of tariffs on imports from China and other countries, along with potential retaliatory measures, threatens to increase costs and reduce demand for Veralto’s products.
Intense Competition: Veralto operates in industries where it must constantly innovate to avoid commoditization; failure to compete effectively or pricing pressures from low-cost competitors can lead to decreased market share and lower prices.
Technological Obsolescence: Growth depends on the timely development of new products; failure to accurately predict customer needs or successfully commercialize innovations can result in wasted R&DR&DResearch & Development — spending on creating new products or technologies investment and reduced revenue.
International Operational Risks: With 56% of 2025 sales derived from outside the U.S., Veralto faces risks including supply chain interruptions, currency devaluation, and complex data privacy requirements that can disrupt operations and increase costs.

2. Company-Specific Risks

Artificial Intelligence Deployment: Veralto is in the early stages of incorporating AI into its offerings; failure to successfully deploy these technologies or the occurrence of unintended consequences from flawed algorithms could harm its competitive position.
Acquisition and Integration Challenges: Veralto’s growth strategy relies on acquisitions, which carry risks such as the inability to realize anticipated synergies, the assumption of unknown liabilities, and the potential for impairment charges if acquired assets underperform.
Information Technology and Cybersecurity: Veralto relies on IT systems for critical processes like order fulfillment and billing; security breaches or system failures could result in the misappropriation of intellectual property and damage to customer relationships.
Governance and Takeover Defenses: Provisions in Veralto’s certificate of incorporation, such as a classified board and the inability of stockholders to act by written consent, may deter potential acquirers and potentially decrease the trading price of common stock.

3. Regulatory/Legal Risks

Data Privacy Compliance: Veralto is subject to the GDPR and various U.S. state privacy laws; non-compliance can result in fines of up to €20 million or 4% of total worldwide annual turnover.
Government Contracting: Less than 2% of 2025 sales were to the U.S. federal government, but these contracts are subject to unique regulations, potential termination for convenience, and audit risks that could lead to the repayment of funds.
Environmental and Safety Liabilities: Veralto faces potential costs related to the remediation of hazardous materials and personal injury claims; while Veralto does not believe these will have a material effect on financial statements, it remains subject to ongoing regulatory oversight.
Intellectual Property Litigation: Veralto is subject to third-party claims of infringement, which could result in significant litigation expenses, the loss of rights to critical technology, or the requirement to redesign products at substantial cost.

4. Financial Impact Map

Global Economic Conditions → Revenue → Reduced demand and longer sales cycles for products and services. Trade Tariffs → Cost of Goods Sold → Increased costs for imported inventory and raw materials. Competition and Pricing Pressure → Gross Margin → Potential requirement to reduce prices to maintain market share. Acquisition-Related Goodwill → Goodwill and Intangible Assets → Potential impairment charges if acquired businesses fail to meet performance expectations. Indebtedness → Interest Expense → $2.7 billion in outstanding debt requires significant cash flow for servicing, limiting funds for other investments.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—
10-Q	Oct 2025	Oct 2025
14A	Mar 2025	—