Veralto Corporation (VLTO), a leader in water quality and product identification solutions, recently reported first-quarter 2025 adjusted earnings per share of $0.95, significantly exceeding the consensus estimate of $0.87 by +9.20%. This marked the fourth consecutive quarter the company has surpassed analyst expectations, underscoring operational execution and resilience in key markets.
This consistent performance builds upon a foundation of steady, albeit modest, top-line expansion. For the full fiscal year 2024, Veralto reported $5.19 billion in revenue, a +3.43% increase from $5.02 billion in 2023, according to financial data from Monexa AI. While net income saw a slight year-over-year decline of -0.72% to $833 million in 2024 compared to $839 million in 2023, net income per share also dipped slightly by -2.05% to $3.50 in 2024 from $3.57 in 2023. Despite this minor contraction in profitability metrics for the full year, the strong start to 2025 suggests momentum may be shifting, driven by robust demand in specific segments like water analytics.
Recent Financial Performance and Key Metrics#
Veralto's latest reported financials for the full year 2024 provide a snapshot of its operational health. The company maintained a strong gross profit margin of 59.79% in 2024, an improvement from 57.78% in 2023, indicating effective cost management relative to revenue growth. Operating income stood at $1.21 billion in 2024, representing an operating income margin of 23.26%, up from $1.14 billion and a 22.7% margin in 2023. EBITDA also saw growth, reaching $1.28 billion in 2024 compared to $1.21 billion in 2023, with the EBITDA margin improving slightly to 24.59% from 24.16%.
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Looking at trailing twelve months (TTM) metrics, Veralto's net income per share is $3.53, aligning closely with the full 2024 figure. The TTM PE ratio stands at 28.35x, while the enterprise value over EBITDA (EV/EBITDA) is 19.96x (Monexa AI). These valuation multiples reflect market expectations and will be explored further in the context of peer comparisons and growth prospects. The TTM return on invested capital (ROIC) is a healthy 17.55%, and return on equity (ROE) is 43.92%, suggesting efficient use of both debt and equity capital to generate returns.
Cash flow generation remains a critical aspect of Veralto's financial profile. In 2024, net cash provided by operating activities was $875 million, a decrease of -9.14% from $963 million in 2023. Free cash flow followed a similar trend, declining by -9.79% to $820 million in 2024 from $909 million in 2023 (Monexa AI). This decrease in cash flow from operations occurred alongside an increase in capital expenditures, which rose to $55 million in 2024 from $54 million in 2023. The change in working capital was a negative $116 million in 2024, compared to a negative $33 million in 2023, contributing to the lower operating cash flow. Despite the year-over-year dip, the absolute level of free cash flow remains substantial at $820 million, providing financial flexibility.
| Metric (FY) | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Revenue (MM USD) | 4,700 | 4,880 | 5,020 | 5,190 |
| Gross Profit (MM USD) | 2,710 | 2,770 | 2,900 | 3,100 |
| Operating Income (MM USD) | 1,040 | 1,080 | 1,140 | 1,210 |
| Net Income (MM USD) | 861 | 845 | 839 | 833 |
| EBITDA (MM USD) | 1,150 | 1,210 | 1,210 | 1,280 |
| Free Cash Flow (MM USD) | 842 | 836 | 909 | 820 |
The historical income statement data from Monexa AI shows a consistent pattern of revenue growth since 2021, with gross profit and operating income largely tracking this trend. Net income has shown more volatility, peaking in 2021 and experiencing slight declines in subsequent years before stabilizing around the $830-$840 million range. This suggests that while top-line expansion and operational efficiency gains have been consistent, factors below the operating income line or changes in effective tax rates may have influenced net income.
Strategic Initiatives and Capital Allocation#
Veralto's strategic direction, as highlighted in recent news, centers on enhancing its market position in water treatment and product quality solutions through targeted acquisitions and technological expansion. The cash flow statement for 2024 indicates significant investment activities, with $434 million used for investing activities, a substantial increase from $55 million in 2023 (Monexa AI). A key component of this was $363 million in acquisitions net, demonstrating a clear focus on inorganic growth to complement organic efforts. This level of acquisition activity is higher than in previous years, with $2 million in acquisitions net in 2023 and $55 million in 2022.
These strategic acquisitions are intended to strengthen VLTO's leadership in water quality solutions, particularly in areas like UV treatment technologies, and expand its footprint in European markets. Such moves are critical in a competitive landscape driven by innovation and regulatory compliance. By integrating new technologies and market access through M&A, Veralto aims to drive future revenue growth and potentially improve margin profiles by offering more comprehensive or higher-value solutions.
Capital allocation also involves returning value to shareholders. Veralto has a consistent dividend policy, recently declaring a quarterly dividend of $0.11 per share, payable on July 31, 2025, as announced on May 15, 2025 (PR Newswire). This follows previous quarterly dividends of $0.11 in March 2025 and December 2024, and $0.09 in September 2024 (Monexa AI). While the current dividend yield is modest at approximately 0.4% TTM, the payout ratio is low at 7.67% TTM, suggesting ample capacity for future dividend growth or reinvestment in the business. The company also engaged in common stock repurchases of $147 million in 2023 and $781 million in 2022, though no buybacks were reported in 2024 (Monexa AI). This indicates a flexible approach to capital returns, balancing dividends, buybacks, and strategic investments.
Financial Health and Balance Sheet Strength#
Veralto's balance sheet reflects a solid financial position, supporting its growth initiatives. As of December 31, 2024, the company held $1.1 billion in cash and cash equivalents, a significant increase from $762 million at the end of 2023 (Monexa AI). Total current assets stood at $2.39 billion, while total current liabilities were $1.25 billion, resulting in a strong current ratio of 2.19x TTM (Monexa AI). This indicates robust short-term liquidity, allowing the company to comfortably meet its near-term obligations.
Total debt amounted to $2.6 billion at the end of 2024, primarily long-term debt. While this represents an increase from $2.02 billion in net debt at the end of 2023, the net debt to EBITDA ratio remains manageable at 1.06x TTM (Monexa AI). Total stockholders' equity increased to $2.04 billion in 2024 from $1.38 billion in 2023. The debt-to-equity ratio is approximately 1.27x (calculated from total debt and equity), or 1.14x TTM according to Monexa AI ratios, which is within a reasonable range for a company pursuing strategic acquisitions.
The increase in goodwill and intangible assets on the balance sheet from $2.96 billion in 2023 to $3.23 billion in 2024 directly correlates with the increased acquisition activity (Monexa AI). This highlights that a significant portion of the company's asset base is tied to acquired businesses, a common characteristic for companies growing through M&A. The management of these acquired assets and the successful integration of new businesses will be crucial for realizing the expected returns on invested capital.
| Balance Sheet Item (FY) | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Total Assets (MM USD) | 4,840 | 4,830 | 5,690 | 6,410 |
| Total Liabilities (MM USD) | 1,640 | 1,580 | 4,300 | 4,360 |
| Total Equity (MM USD) | 3,200 | 3,230 | 1,380 | 2,040 |
| Cash (MM USD) | -135 | -123 | 762 | 1,100 |
| Total Debt (MM USD) | 135 | 123 | 2,780 | 2,600 |
Note: Cash figures for 2021 and 2022 appear negative in the source data, which may indicate a specific accounting treatment or reporting method. Total debt shows a significant jump in 2023, likely related to financing for acquisitions or other strategic activities. (Monexa AI)
Industry Context and Competitive Landscape#
Veralto operates primarily within the water treatment and environmental solutions sectors, markets characterized by strong structural growth drivers. Increasing global water scarcity, aging water infrastructure in developed economies, and tightening environmental regulations worldwide are fueling demand for advanced water analytics and treatment technologies. Projections suggest the water treatment industry could grow at a CAGR of 7.17% from 2024 to 2035, according to industry analyses referenced in the provided data. This favorable market backdrop provides a tailwind for VLTO's core businesses.
The regulatory environment, particularly in 2025, continues to emphasize stricter water quality standards and pollution control measures. This regulatory push compels industries and municipalities to invest in sophisticated monitoring and treatment solutions, directly benefiting companies like Veralto. The global focus on sustainability and climate change adaptation further reinforces the long-term demand for eco-friendly water management solutions.
In this competitive landscape, Veralto holds a leadership position in specific niches like water analytics and product quality/packaging identification. Its strategic acquisitions are aimed at consolidating this position and expanding into related high-growth areas. While the data provides limited direct peer financial comparisons beyond valuation multiples, companies like Danaher Corporation (from which Veralto was spun off), Xylem Inc., and others compete across various segments of the water technology and industrial solutions markets. VLTO's focus on specialized instrumentation and solutions differentiates it within this broader space.
Analyst Outlook and Future Prospects#
Analyst estimates for VLTO point towards continued growth in the coming years. The consensus forecast for 2025 revenue is approximately $5.40 billion, growing to $5.66 billion in 2026 and $6.00 billion in 2027, representing a projected revenue CAGR of 6.42% over this period (Monexa AI). Earnings per share are estimated to rise from around $3.68 in 2025 to $4.00 in 2026, and further to $4.37 in 2027, indicating an estimated EPS CAGR of 8.8% over the next few years (Monexa AI).
These growth projections support the current valuation multiples. The forward PE ratio is estimated at 26.99x for 2025 and 24.69x for 2026, based on analyst EPS estimates (Monexa AI). The forward EV/EBITDA is estimated at 19.90x for 2025 and 18.97x for 2026. While these figures are higher than the valuation metrics of some smaller, less diversified peers like Ennis Inc. (6.4x EV/EBITDA) and Acco Brands (7.1x EV/EBITDA), as referenced in the blog draft, they are more reflective of companies operating in high-growth, mission-critical technology segments. The premium valuation suggests investors are factoring in Veralto's expected growth trajectory, market leadership, and strong profitability margins.
| Valuation Metric | TTM | 2025 (Est) | 2026 (Est) | 2027 (Est) |
|---|---|---|---|---|
| P/E Ratio | 28.35x | 26.99x | 24.69x | 22.60x |
| EV/EBITDA | 19.96x | 19.90x | 18.97x | 17.88x |
| Price/Sales | 4.69x | - | - | - |
| Price/Book | 10.76x | - | - | - |
Source: Monexa AI and Analyst Estimates
Management's execution of strategic initiatives, particularly the integration of recent acquisitions and continued investment in R&D ($253 million in 2024, or 4.87% of revenue TTM), will be key to achieving these growth targets (Monexa AI). The company's ability to translate top-line growth into expanding profitability margins, as seen in the historical margin trends, will be crucial for sustaining valuation levels. Historical performance shows consistent operating and gross margin improvement over the past few years, suggesting effective operational management despite slight fluctuations in net margin.
Conclusion and Key Takeaways#
Veralto Corporation's recent performance, highlighted by a strong beat on Q1 2025 earnings and consistent execution against analyst expectations over the past year, positions the company favorably. The underlying financial data reveals a business with solid profitability margins, a healthy balance sheet, and strong cash flow generation, despite a recent year-over-year dip in operating and free cash flow in 2024. The strategic emphasis on targeted acquisitions and expansion into high-growth areas within water treatment and environmental solutions aligns well with prevailing industry trends driven by regulatory pressures and increasing global demand for clean water.
For investors, Veralto represents exposure to a critical and growing sector. The company's ability to consistently surpass earnings estimates, as seen in the Q1 2025 results and the preceding quarters, indicates operational efficiency and potentially conservative guidance. While the valuation multiples appear high compared to some industrial peers, they are supported by expected revenue and EPS growth rates that outpace many traditional industrial companies.
Key takeaways include Veralto's demonstrated ability to execute on its operational plans, its strategic commitment to inorganic growth to supplement organic efforts, and its strong financial health providing flexibility for future investments and shareholder returns. Monitoring the successful integration of recent acquisitions, the impact of macroeconomic factors on operational costs, and the company's progress towards achieving its projected growth targets will be essential for evaluating Veralto's performance moving forward. The upcoming earnings announcement, scheduled for July 23, 2025 (Monexa AI), will provide the next significant data point for assessing the company's trajectory.