Veralto VLTO
Industrials · Industrial - Pollution & Treatment Controls · Synthos Deep Dive · 2026-07-03
The Overview
Veralto sells the "picks and shovels" of two boring-but-essential jobs: making sure water is clean and safe (its Hach, Trojan and ChemTreat brands test and treat water for cities, factories and food companies), and printing the codes, dates and labels you see stamped on packaged food, drinks and medicine (its Videojet, Linx and Pantone brands). Once a customer installs the machines, they have to keep buying Veralto's chemicals, reagents and ink forever — like buying razor blades after you own the razor. That makes the revenue steady and very profitable.
The catch: the business only grows a little each year (call it low-to-mid single digits), because water utilities and factories don't suddenly double their spending. Meanwhile the stock is priced as if it were a faster grower — about 24 times its yearly profit. That's not crazy-expensive, but there isn't a bargain here either. Our verdict is Watch: a fine company, no obvious catalyst, wait for a cheaper price or faster growth.
Here's what our three scores mean in everyday terms:
- Downside Risk 4/10 (fairly safe). Low debt, a calm stock that doesn't swing much, and repeat-purchase revenue that holds up in a downturn. The main risk is simply overpaying.
- Growth Quality 6/10 (good, not great). Very profitable and durable, but it grows slowly.
- Exponential Potential 3/10 (low). Don't expect this one to multiply your money quickly — it's a steady grinder in mature markets.
The one big worry: a chunk of Veralto's sales are "short-cycle" industrial orders that can dip fast if factories pull back (a recession or a tariff shock). If growth stalls while the stock is still priced at a premium, it can fall.
Putting a number on it: our fair-value estimate is $100 against a current price of $98.56 — real upside if our numbers are right.
Our summary metrics
Low leverage (0.9× net debt/EBITDA), beta 0.85, recurring-revenue base — but 24× on ~9% EPS growth is a full PEG ~2.4.
~5% forward revenue CAGR, ~9% EPS CAGR, 60% gross margin, 33% ROE, sticky razor-and-blade model — good, not spectacular.
Mid-single-digit, decelerating top-line in mature end markets; a defensive compounder, not a multibagger.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Mid-single-digit, decelerating top-line in mature end markets; a defensive compounder, not a multibagger.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $106.33 (high $113 / low $102; 5 Buy · 7 Hold · 0 Sell → "Hold") — context, not our anchor |
| Valuation | 24× trailing EPS · 22× FY26E · 20× FY27E · 17× FY29E · EV/S 4.3× · EV/EBITDA 17.5× |
| Technicals | Mixed — $92.55, above 50-DMA but below 200-DMA, RSI 76 (overbought), −9.8% 12-mo vs SPY +20.6% |
| Conviction | Low — zero expert voices in the KB; this is a numbers-only call |
| Position sizing | If owned, a small 1–2% defensive/quality-industrials sleeve position — not a high-conviction bet |
What the experts actually said
No independent expert claims in the Synthos knowledge base yet for VLTO — this dive is fundamentals- and technicals-driven, not panel-driven.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $98.56, 5% above the 50-day average ($94), 5% above the 200-day average ($93) — an uptrend. 10% below the 52-week high of $109, 20% above the 52-week low of $82.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $98.56 is currently inside the band (band $95–$100).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 57.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently below its signal line by 0.21, negative momentum.
Relative performance vs S&P 500 & its sector (XLI (sector)), set to 100 a year ago
Solid = VLTO · dashed = S&P 500 · dotted = XLI (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Veralto (NYSE: VLTO) is a global provider of "essential quality" instrumentation and consumables, spun out of Danaher in October 2023 and run on the Danaher-style Veralto Enterprise System operating playbook. It reports in two segments:
- Water Quality (WQ) — instruments, UV/treatment systems, chemical reagents and services for measuring, analyzing and purifying water across municipal, industrial, food/beverage and lab settings. Brands: Hach, Trojan Technologies, ChemTreat, McCrometer.
- Product Quality & Innovation (PQI) — marking/coding systems (dates, lot codes, barcodes) for packaged goods plus the consumables (inks, fluids), and color/packaging software. Brands: Videojet, Linx, Esko, X-Rite, Pantone.
The economic engine is razor-and-blade recurring revenue: instruments and printers are the razor; reagents, inks, service and software are the high-margin blades. Fiscal year ends late December/early January (52/53-week calendar).
Revenue mix (FY2025, from filings):
- By type (recurring vs. not): Recurring $3,359M (61%) · Nonrecurring $2,144M (39%). The recurring majority is the quality tell — it dampens cyclicality and underpins the margins.
- By geography: United States $2,440M (44%) · All other countries $2,446M · Germany $281M · China $336M. Roughly evenly split US vs. rest-of-world — geographically diversified, with modest China exposure (~6%).
2. The expert thesis — why the panel is bullish (traceable)
There is no expert coverage for VLTO in the Synthos knowledge base. total_claims = 0, net_bullish_voices = 0. None of our tracked investor voices has an on-record, distilled view on Veralto that we can reconcile to a real claim_id.
That matters for how you read this note: the verdict is fundamentals- and quant-driven, not conviction-driven. We are not borrowing anyone's book here — every judgment below is built from the reported financials, live analyst estimates (FMP), management's own guidance, and our scoring framework. Where a normal high-conviction name would show a panel of independent voices pointing the same way, this one shows nothing, and we score it accordingly (Conviction: Low). Absence of coverage is not a negative signal in itself — Veralto is a well-run business — but it means there is no external, independent validation of the call, and you should weight it as a quant/quality screen result rather than a researched thesis.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 4 · Low-Moderate | Net-debt/EBITDA 0.9×, beta 0.85, 61% recurring revenue and 60% gross margin make it financially sturdy and defensive. The offset: 24× trailing on ~9% EPS growth (PEG ~2.4) leaves little margin for a short-cycle stall. |
| Growth Quality | 6 · Good | ~5% forward revenue CAGR, ~9% EPS CAGR, ROE 33%, ROIC 16%, sticky consumables — durable and highly profitable, but the top line grows like a defensive industrial, not a compounder. |
| Exponential Potential | 3 · Low | Mid-single-digit, decelerating revenue in mature water/coding markets (FY28→FY29E revenue barely grows in consensus); a $23B cap in slow-TAM end markets caps the upside. This is a grinder. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. The cases bound the range; the scores above summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Core sales growth re-accelerates to mid/high single digits as M&A (In-Situ, GlobalVision) and the cost-optimization program compound; FY27E EPS beats to ~$4.90 (vs $4.67 cons); the market pays a premium ~25× for a Danaher-quality compounder. | ~$120 (+30%) |
| Base (our anchor) | Estimates roughly hit — FY27E EPS ~$4.67; a durable ~5% top-line / high-single-digit EPS grower with 60% GM earns a ~21× multiple. | ~$100 (+8%) |
| Bear | Short-cycle industrial demand stalls (recession/tariffs); core sales flatten; FY27E EPS misses to ~$4.40; multiple de-rates toward the market at ~17×. | ~$76 (−18%) |
Synthos fair value = the base case, ~$100 (+8%), with the full $76–$120 span as the honest range. This anchor sits just below the Street's $106 consensus — we are slightly more cautious on the multiple a ~5%-grower deserves. This is a tracked call — the Forecaster Scorecard grades it once it matures. The modest +8% base-case upside is exactly why the verdict is Watch, not Buy: the quality is real, but the price already reflects it.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). VLTO is a solid compounder with low exponential potential:
- Forward growth: revenue CAGR FY25→FY29E ~4.8% ($5.50B → $6.63B); EPS CAGR ~9.3% ($3.76 → $5.36) — the EPS growth outruns revenue via margin expansion, buybacks and bolt-on M&A, but the underlying demand grows slowly.
- Acceleration (the 2nd derivative) is flat-to-negative: consensus revenue growth is ~6.7% (FY26E) then decelerates, and FY28E→FY29E revenue is essentially flat (~$6.53B → $6.63B). There is no inflection here — this is steady-state industrial compounding, not a takeoff.
- Room to run: the water-quality and product-coding TAMs are large and stable, but they are mature — utilities and factories grow spend at GDP-ish rates. At $23B the name can compound, but the end markets don't offer a 3–5× runway.
- Reinvestment runway: genuinely good here — high ROIC (16%), strong FCF ($1.0B, ~4.5% FCF yield), and a proven Danaher-style M&A machine (In-Situ + GlobalVision, $620M, closed 2026). This is where the "quality" lives.
Exponential Potential: Low (3/10). Own it — if at all — for durable high-single-digit earnings compounding and defensiveness, never for a fast multibagger. A small, decelerating cap would score high on this axis; VLTO is neither small enough nor accelerating.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $5.50B, +6.0% (FY24 $5.19B, +3.4% on FY23 $5.02B). Steady mid-single-digit growth; Q1'26 came in at $1.42B (+6.7% YoY), with management noting only ~1.9% core (organic) growth — so recent growth is M&A- and price-assisted.
- Quarterly trajectory: Q1'25 $1.33B → Q2 $1.37B → Q3 $1.40B → Q4 $1.40B → Q1'26 $1.42B. Smooth and seasonal, no drama — the recurring base shows.
- Margins: gross 59.9% TTM, operating ~23.2%, net 17.3% TTM. Q1'26 GAAP operating margin 23.8% (mgmt-adjusted 25.1%). High and stable — the razor-and-blade signature.
- Earnings: net income $940M FY25 (+12.8% on FY24 $833M); diluted EPS $3.76 vs $3.34. Q1'26 diluted EPS $1.02 GAAP ($1.07 adjusted).
- Cash flow: operating CF $1.08B, capex only −$63M (capital-light), FCF $1.01B FY25 — ~92% of net income converts to free cash. This is a cash machine.
- Balance sheet: total debt $2.67B, cash $2.03B, net debt $642M, net-debt/EBITDA 0.9× — investment-grade, conservatively levered, deleveraged sharply from ~2.0× at the 2023 spin. Interest coverage ~14×.
6. Valuation — priced in or room?
VLTO is fully but not egregiously priced: 24× trailing EPS, 22× FY26E, 20× FY27E, 4.3× EV/sales, 17.5× EV/EBITDA. The bull's defense is quality — a 60%-gross-margin, 33%-ROE, ~92%-FCF-conversion franchise arguably deserves a premium to the industrial average. But the arithmetic is unforgiving: on ~9% forward EPS growth, a 24× multiple is a PEG of ~2.4 (FMP's forward PEG 2.38 agrees). That is compounder pricing for a defensive-industrial growth rate. The forward P/E does compress to 17× by FY29E if estimates hit — but at a flat price that only earns you the earnings growth, not a re-rating. Street targets (context): consensus $106.33, high $113, low $102, rating "Hold" (5 Buy / 7 Hold / 0 Sell) — an unusually tight, low-conviction band. Our $100 base FV sits just below consensus. Not a value buy, and not enough forward upside to be a growth buy either — a quality-at-full-price name best entered on weakness.
7. Technicals (from the tech block)
- Trend: mixed / neutral. $92.55 sits above the 50-DMA ($86.14) but below the 200-DMA ($95.02) — a recovering but not-yet-confirmed uptrend; the 50 is still below the 200 (no golden cross).
- Location: −15.7% off the 52-week high ($109.75), +12.6% off the 52-week low ($82.23); max drawdown from peak −18.5%. A name working back from a meaningful correction.
- Momentum: RSI(14) 76.5 — overbought (>70). MACD +1.28 (mildly positive). The overbought reading is a stretched-entry warning: chasing here into the 200-DMA overhead is poor risk/reward.
- Relative strength (the tell): VLTO −9.8% 12-mo vs SPY +20.6% and QQQ +30.3% — a persistent laggard. 3-mo +5.1% vs SPY +13.7% (still lagging). This is the opposite of a leadership chart.
- Read: technicals do not confirm a buy. A short-term bounce (RSI overbought, above 50-DMA) inside a 12-month downtrend that is fighting overhead 200-DMA resistance. Patience is rewarded — a pullback toward the rising 50-DMA (~$86) with RSI reset would be a far better entry.
8. Moat & competitive position
Veralto's moat is a classic installed-base + consumables + switching-cost structure: once a Hach analyzer or a Videojet coder is embedded in a customer's regulated workflow (water compliance, food-safety date coding), rip-and-replace is costly and risky, and the customer keeps buying Veralto's proprietary reagents and inks. Add regulatory tailwinds (tightening water-quality and traceability standards), strong brands (Pantone is an industry color standard), and the Veralto Enterprise System operating discipline inherited from Danaher, and you get durable pricing power and 60% gross margins. Threats are limited but real: short-cycle industrial cyclicality in PQI, and slow-growth end markets that cap the ceiling.
Peer set (FMP-listed, market cap): Dover $28.8B, Hubbell $25.7B, Verisk $24.7B, AerCap $23.3B, Curtiss-Wright $28.1B, Pentair $12.4B (the closest water pure-play comp), plus Equifax, EMCOR, Old Dominion, Elbit. (This FMP peer list is a market-cap cohort, not a clean business comp; the truest analogs are Danaher/Xylem/Pentair/Ecolab in water and Dover in coding — not all present here.) VLTO screens as one of the higher-quality, higher-margin names in the cohort, which is precisely why it carries a premium multiple.
9. Management, capital allocation & guidance
- Capital allocation: disciplined and shareholder-friendly. In 2026 YTD management deployed ~$1B: $620M on strategic acquisitions (In-Situ, GlobalVision) and $300M of buybacks (1.3% of shares), while paying a modest dividend ($0.50/yr, ~0.5% yield, 12% payout) — the classic Danaher bolt-on-M&A-plus-buyback model. A new cost-optimization program targets $65–75M annual savings by 2028 (one-time charge $85–105M).
- Insider activity: the sampled window shows routine equity-comp awards and small tax-withholding ("F-InKind") dispositions plus one tiny 300-share CAO sale — no cluster of alarming discretionary selling. Normal.
- Management's own guidance (half-weighted — their book): from the SEC 8-K/Item 2.02 earnings release dated 2026-04-28, CEO Jennifer Honeycutt raised full-year 2026 adjusted EPS guidance to $4.20–$4.28 (up from $4.10–$4.20), with non-GAAP core sales growth of 3.0%–4.5%, ~25 bps adjusted operating-margin expansion, and FCF conversion raised to ~100% of GAAP net earnings. Q2'26 guide: core sales +3.0%–4.0%, adjusted operating margin ~23.5%, adjusted diluted EPS $0.96–$1.00. Management framed core growth as accelerating as the year progresses. Treat this as management's self-interested framing (half-weight), but it is a real, specific raise and corroborates the mid-single-digit growth / high-conversion picture above.
10. Catalysts & what to watch
- Next earnings: 2026-07-23 (Q2'26; mgmt guide adj EPS $0.96–$1.00, Street ~$1.00, revenue ~$1.45B). The key line: core (organic) sales growth — management promised acceleration; watch whether the ~1.9% Q1 core rate actually picks up.
- M&A integration: In-Situ + GlobalVision contribution and pipeline — the growth model leans on bolt-ons.
- Cost-optimization program: realization of the $65–75M savings toward 2028 = margin support.
- Short-cycle demand / tariffs: PQI industrial order trends and tariff impacts on cost — the main cyclical swing factor.
- FCF conversion: management raised the bar to ~100%; a miss would dent the quality thesis.
Thesis tripwires (what would change the call): core sales growth turning negative for two quarters; adjusted operating margin contracting; FCF conversion falling below ~85%; or the multiple re-rating above ~26× without a growth acceleration (adds downside).
11. Key risks
- Valuation / de-rating (primary): 24× trailing on ~9% EPS growth (PEG ~2.4) leaves no cushion — a modest growth or margin disappointment re-rates the stock.
- Cyclicality (structural): the ~39% nonrecurring / short-cycle PQI-industrial exposure can stall quickly in a downturn or tariff shock.
- Slow-growth end markets: mature water/coding TAMs cap the upside; the story depends on M&A and margin to lift EPS above GDP-ish organic growth.
- M&A dependence: the compounding model needs a steady deal pipeline at sensible prices; overpaying or integration slips would hurt returns on capital.
- Relative-strength / technical: a 12-month laggard fighting overhead 200-DMA resistance while overbought — momentum is not a tailwind.
- No independent validation: zero expert coverage in the KB — the call rests entirely on the numbers, with no external conviction check.
12. Verdict, position sizing & monitoring
Watch. Veralto is a genuinely high-quality, defensive, cash-generative franchise — 61% recurring revenue, 60% gross margin, 33% ROE, ~92% FCF conversion, a 0.9× net-debt/EBITDA balance sheet, and a proven Danaher-style capital-allocation machine. But quality is not a price: at 24× trailing on ~5% revenue / ~9% EPS growth, the base-case fair value (~$100) sits only ~8% above spot and below the Street's own $106 consensus, the chart is a 12-month laggard fighting overhead resistance while overbought, and there is no expert conviction in the KB to argue for paying up. That combination is the definition of Watch, not Buy — a name to own on weakness, not at a stretched entry.
- Sizing (if owned): a small 1–2% defensive/quality-industrials sleeve position, added on pullbacks toward the ~$86 rising 50-DMA rather than chased at RSI 76. Not a high-conviction weight.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score each earnings print (next 2026-07-23). A move to a genuinely cheap multiple (~17–18×) or a durable re-acceleration of core sales would upgrade this toward Buy — Tactical.
- Single biggest risk: a short-cycle industrial stall while the stock still carries a premium multiple. This verdict is logged as a tracked Synthos call as of 2026-07-03 at $92.55.
Provenance & disclosures
- Traceability: 0 KB claims, breadth 0 — there is no expert coverage for VLTO in the Synthos knowledge base, so no
claim_ids are cited. This is a fundamentals-/quant-driven note; fabricated conviction is structurally impossible (and none is claimed). - Data as-of: fundamentals 2026-04-03 (Q1'26) · estimates & prices 2026-07-03 · management guidance from the SEC 8-K earnings release dated 2026-04-28. Forward figures are analyst consensus (FMP) or management guidance, labeled as estimates.
- Management caveat: management's FY26 guidance ($4.20–$4.28 adj EPS, +3.0–4.5% core sales) is management's own book, half-weighted by design.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").