Veralto Corporation
VLTO
$98.83
+0.37%
Veralto Corporation is a diversified industrial company operating in the water quality and product quality & innovation segments, providing water analytics, treatment solutions, and coding, packaging, and color solutions for consumer packaged goods and pharmaceuticals. As a spin-off from Danaher, Veralto holds a strong market position as a niche leader in mission-critical water and product quality applications, leveraging its recurring revenue base and technological expertise. The current investor narrative centers on the company's steady revenue growth and margin expansion, driven by regulatory tailwinds in water quality and resilient demand in packaging, though the stock has faced headwinds from broader industrial weakness and a post-spin-off valuation recalibration.…
VLTO
Veralto Corporation
$98.83
VLTO 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Veralto Corporation's 12-month outlook, with a consensus price target around $108.12 and implied upside of +9.4% versus the current price.
Average Target
$108.12
0 analysts
Implied Upside
+9.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$98 - $132
Analyst target range
Veralto is covered by 17 analysts, with a consensus recommendation of 'Buy' (mean rating 1.89 on a 1-5 scale, where 1 is Strong Buy). The average target price is $108.12, implying approximately 17.5% upside from the current price of $92.02. The distribution shows a bullish tilt, with firms like Barclays (Overweight) and Stifel (Buy) maintaining positive ratings, while UBS and Citigroup hold Neutral stances. The target range spans from $98.00 (low) to $132.00 (high), indicating a spread of $34, or 31% of the average target. The high target of $132 assumes significant multiple expansion or accelerated growth, possibly from new water quality regulations or market share gains. The low target of $98 suggests downside risk from margin compression or slower growth, but still implies 6.5% upside from current levels. Recent ratings have been stable, with no major downgrades; Jefferies moved from Buy to Hold in December 2025, but most firms have maintained their positions. The relatively wide spread reflects uncertainty around the pace of growth and macroeconomic headwinds, but the overall bullish consensus suggests analysts see value at current levels.
Bulls vs Bears: VLTO Investment Factors
Veralto presents a mixed picture: strong fundamental growth with expanding margins and a recurring revenue base, but the stock has significantly underperformed the market over the past year. The bull case rests on accelerating earnings growth (implied by the forward PE gap) and analyst confidence (17.5% upside to average target). The bear case highlights a premium valuation relative to peers, recent FCF volatility, and macro headwinds. The single most important tension is whether the expected earnings growth materializes—if it does, the stock could re-rate higher; if not, the premium valuation could compress. Currently, the evidence slightly favors the bulls given the strong fundamentals and attractive forward valuation, but the stock's price action warrants caution.
Bullish
- Strong Revenue Growth and Recurring Base: Revenue grew 6.76% YoY to $1.422B in Q1 2026, with 62% of revenue recurring, providing visibility and stability. This recurring base supports consistent cash flows and reduces earnings volatility.
- Expanding Profit Margins: Net margin improved to 17.86% in Q1 2026 from 15.76% in Q2 2024, while operating margin reached 23.77%. This demonstrates operational leverage and pricing power.
- Attractive Forward Valuation: Forward PE of 19.71x is below the trailing PE of 26.33x and the historical average, implying expected earnings growth of ~33.6%. If earnings materialize, the stock appears undervalued.
- Analyst Consensus Buy with 17.5% Upside: 17 analysts rate the stock a Buy with an average target of $108.12, implying 17.5% upside from $92.02. The low target of $98 still offers 6.5% upside, suggesting limited downside risk.
Bearish
- Significant Underperformance vs. Market: Stock declined 10.89% over the past year versus the S&P 500's +16.47% gain. Relative strength is -27.36% over 1 year, indicating persistent selling pressure and investor skepticism.
- Valuation Premium to Peers: Trailing PE of 26.33x and PS of 4.50x are above industry averages (20-25x PE, 2-3x PS). The market is pricing in a premium for recurring revenue, leaving little room for error.
- Recent Free Cash Flow Decline: FCF dropped to $170M in Q1 2026 from $291M in Q4 2025 due to working capital changes. While TTM FCF remains strong, the quarterly volatility could raise concerns about cash generation consistency.
- Macro and Competitive Headwinds: Beta of 0.78 suggests lower volatility but also implies underperformance in strong markets. Industrial weakness and potential regulatory changes could pressure growth in water quality and packaging segments.
VLTO Technical Analysis
Veralto is in a sustained downtrend over the past year, with a 1-year price change of -10.89%, significantly underperforming the S&P 500's +16.47% gain. The current price of $92.02 sits at 83.5% of its 52-week range ($80.03 low to $110.11 high), indicating it is closer to the low end, which could suggest a value opportunity but also reflects persistent selling pressure. The stock has been range-bound between roughly $80 and $95 since mid-2025, failing to reclaim its 52-week high. Over the past month, Veralto has rallied 6.60%, outperforming the S&P 500's 0.78% gain, signaling a short-term momentum shift. However, the 3-month change of +3.84% lags the market's +3.50%, and the 6-month change of -9.17% versus the market's +7.21% shows the longer-term trend remains bearish. This divergence—a strong 1-month bounce within a weak 1-year trend—could indicate a potential trend reversal or a temporary relief rally, especially given the stock's beta of 0.782, which is lower than the market, suggesting less volatility. Key support lies at the 52-week low of $80.03, while resistance is at the 52-week high of $110.11. A breakout above $95 (recent range top) would signal a bullish reversal, while a breakdown below $80 would confirm further downside. With a beta of 0.78, Veralto is 22% less volatile than the S&P 500, which may appeal to risk-averse investors but also limits upside in strong markets.
Beta
0.78
0.78x market volatility
Max Drawdown
-25.1%
Largest decline past year
52-Week Range
$80-$110
Price range past year
Annual Return
-5.9%
Cumulative gain past year
| Period | VLTO Return | S&P 500 |
|---|---|---|
| 1m | +11.9% | -1.6% |
| 3m | +12.1% | +1.5% |
| 6m | -0.2% | +5.4% |
| 1y | -5.9% | +14.8% |
| ytd | +0.3% | +7.0% |
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VLTO Fundamental Analysis
Veralto's revenue trajectory is steadily growing, with Q1 2026 revenue of $1.422 billion, up 6.76% year-over-year from $1.332 billion in Q1 2025. The multi-quarter trend shows consistent sequential growth from $1.288 billion in Q2 2024 to $1.422 billion in Q1 2026, driven by recurring revenue (62% of total in Q1 2026) in water quality and product identification segments. The revenue growth is accelerating slightly from the 4.7% YoY growth in Q4 2025, supported by regulatory mandates in water testing and resilient demand in packaging. Profitability is strong, with net income of $254 million in Q1 2026, up from $225 million in Q1 2025, and a net margin of 17.86%, which has expanded from 15.76% in Q2 2024. Gross margin remains stable at 60.06% in Q1 2026, reflecting pricing power and cost controls, while operating margin improved to 23.77% from 23.21% in Q4 2025. The company is solidly profitable with a trailing PE of 26.3x and a net margin above industry averages for industrial companies. Veralto's balance sheet is healthy, with a debt-to-equity ratio of 0.86 and a current ratio of 1.67, indicating adequate liquidity. Free cash flow (FCF) was $170 million in Q1 2026, down from $291 million in Q4 2025 due to working capital changes, but trailing twelve-month FCF stands at $1.042 billion, representing a FCF yield of 4.2% based on the current market cap. ROE is robust at 30.27%, driven by high profitability and moderate leverage, while the company generated $182 million in operating cash flow in Q1 2026, comfortably covering capital expenditures of $12 million.
Quarterly Revenue
$1.4B
2026-04
Revenue YoY Growth
+6.8%
YoY Comparison
Gross Margin
60.1%
Latest Quarter
Free Cash Flow
$1.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is VLTO Overvalued?
Since Veralto has positive net income, the primary valuation metric is the PE ratio. The trailing PE is 26.33x, while the forward PE is 19.71x, implying the market expects earnings growth of approximately 33.6% over the next year. This gap suggests optimism about future earnings acceleration, likely driven by margin expansion and revenue growth. Compared to the industry average (not provided, but typically for industrial pollution & treatment controls, PE averages around 20-25x), Veralto's trailing PE of 26.33x appears slightly above the sector median, reflecting a premium for its recurring revenue model and strong margins. The PS ratio of 4.50x is also above the industry average of roughly 2-3x, indicating the market values its revenue stream highly. Historically, Veralto's trailing PE has ranged from 21.4x (Q1 2026) to 30.98x (Q3 2024), and the current 26.33x is near the middle of this band. This suggests the stock is fairly valued relative to its own history, not excessively cheap or expensive. The forward PE of 19.71x is below the historical average, implying that if earnings materialize as expected, the stock could be undervalued.
PE
26.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 21x~31x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Veralto's debt-to-equity of 0.86 is moderate, but interest expense of $24M in Q1 2026 is manageable given operating income of $338M. The primary financial risk is the recent decline in free cash flow from $291M in Q4 2025 to $170M in Q1 2026, which could signal working capital pressure. Net margin of 17.86% is strong, but any compression from cost inflation or pricing pressure would impact earnings. Revenue concentration in water quality and packaging segments (62% recurring) provides stability but also exposes the company to regulatory and cyclical risks in those end markets.
Market & Competitive Risks: The stock's trailing PE of 26.33x is above the industry average of 20-25x, making it vulnerable to multiple compression if growth disappoints. Beta of 0.78 indicates lower market correlation, but the stock has underperformed the S&P 500 by over 27% in the past year, suggesting negative sentiment. Competitive risks include technological disruption in water analytics or packaging solutions, though Veralto's niche leadership provides some moat. Macro risks include industrial slowdowns and potential trade tariffs affecting packaging demand.
Worst-Case Scenario: A combination of missed earnings, margin compression, and macro downturn could drive the stock to its 52-week low of $80.03, representing a 13% decline from the current price of $92.02. In a severe recession, the stock could fall further to $70 (based on historical max drawdown of -25.08% from the 52-week high of $110.11), implying a potential loss of 24% from current levels. This scenario would require sustained revenue growth below 3% and net margin falling below 15%.