Veralto's Q4 Earnings: Revenue Meets Estimates, EPS Surprises

Veralto (NYSE: VLTO) reported quarterly revenue in line with analyst expectations, driven by a 4.4% year-over-year increase to $1.35 billion. The company's non-GAAP earnings per share (EPS) of $0.95 exceeded consensus estimates by 6.5%.

Key Highlights:

* Revenue: $1.35 billion (in line with estimates)
* Adjusted EPS: $0.95 (6.5% beat)
* Adjusted EPS Guidance: $3.65 midpoint (1.6% miss)
* Operating Margin: 22.9% (in line with prior year)
* Market Cap: $25.02 billion

Company Overview:

Veralto, spun off from Danaher in 2023, specializes in water analytics and treatment solutions. Its focus on emission and water conservation drives innovation and demand for its services. However, the company's performance is sensitive to economic cycles, particularly interest rate fluctuations.

Sales Growth:

Veralto's sales growth has been sluggish, with a 3.4% compound annual growth rate over the past three years. This falls short of industry benchmarks. Annualized revenue growth over the last two years has remained at 3.3%, suggesting consistent weakness in demand.

Adjusted Operating Margin:

Veralto boasts a strong operating margin of 22.8% over the past four years. In Q4, the margin remained at 22.9%, indicating stability. The company's high gross margin provides a solid foundation for profitability.

Earnings Per Share:

EPS growth has outpaced revenue growth, with a 8.9% compound annual growth rate over the past two years. However, Q4 EPS missed analyst estimates by a slight margin. Wall Street projects a 4.7% growth in EPS over the next 12 months.

Conclusion:

Veralto's mixed fourth quarter results include an EPS beat and missed revenue and EPS guidance. The stock traded up slightly after the announcement. Further analysis is necessary to assess the company's long-term prospects and determine its attractiveness as a buy.