Latest news with #VLTO
Yahoo
16-05-2025
- Business
- Yahoo
Veralto's Growth Prospects Shine Despite Competitive Risks
Veralto Corporation VLTO is currently benefiting from its leadership in Water Quality and PQI segments, strategic acquisitions, and growing dividends. Quarterly adjusted earnings of 95 cents per share surpassed the consensus mark by 9.2% and increased 13.1% year over year. Total revenues of $1.33 billion beat the consensus mark by a 3.8% margin and grew 6.9% from the year-ago quarter. Veralto Corporation revenue-ttm | Veralto Corporation Quote VLTO's leadership in the Water Quality segment positions it to capitalize on robust growth opportunities in the United States. The industrial and municipal verticals serve as key drivers of this growth. In the industrial vertical, the CHIPS Act of 2022 provides a significant tailwind through semiconductor manufacturing grants, research investments and tax credits. Additionally, the global increase in semiconductor production enhances VLTO's prospects, as ultra-pure water is critical for semiconductor manufacturing. While the semiconductor industry has faced recent challenges, the long-term outlook remains favorable, driven by rising demand for digital tools, AI and autonomous technologies, which necessitate more semiconductor production. In the municipal vertical, increased U.S. government funding to address the country's water infrastructure challenges offers a strong growth catalyst. This support is expected to boost investments in upgrading and modernizing water systems, further driving demand for VLTO's solutions. The company's WC revenues grew 3.4% year over year in 2024. VLTO has established itself as a trusted leader in the Product Quality and Inspection (PQI) segment, serving the major consumer-packaged goods (CPG), life sciences, and pharmaceutical companies. The Marketing & Coding (M&C) sub-segment is the largest contributor to PQI's revenues, reflecting its critical role in driving industry growth. M&C has become indispensable for CPG and pharmaceutical companies in a digital-first world. In the pharmaceutical sector, coding ensures regulatory compliance, facilitates accurate data management and enhances communication with healthcare professionals and patients. These capabilities are vital as the industry increasingly relies on digital solutions for efficiency and transparency. For CPG companies, M&C integrates supply chain operations with consumer insights, enabling quick adaptation to market trends and fostering stronger customer engagement. This innovation helps businesses stay competitive in an ever-evolving landscape. By addressing these critical needs, VLTO empowers its clients to innovate, build stronger customer relationships and maintain a competitive edge. This robust positioning within high-growth industries highlights VLTO's potential for sustained success, making it an appealing investment opportunity for stakeholders seeking exposure to innovative and resilient markets. The company's PQI revenues grew 3.7% year over year in 2024. The recent acquisition of TraceGains strengthened the segment by adding advanced digital workflow solutions, particularly for the food and beverage industry. Veralto's Trojan Technologies is set to strengthen its European customer support and service excellence through the planned acquisition of AQUAFIDES, expected to be finalized in the second quarter of 2025. This acquisition will also broaden VLTO's UV treatment portfolio by adding high-quality, efficient, and purpose-built systems. VLTO's commitment to shareholder returns, despite being a recent entrant to the stock market, makes it an appealing investment option. Since its NYSE listing in late 2024, the company has consistently paid a quarterly dividend of 9 cents, demonstrating financial discipline. The recent 22% dividend increase to 11 cents per share further underscores VLTO's confidence in its financial strength and growth prospects. This early adoption of a progressive dividend policy is particularly significant for a newly listed company, as it signals stability, profitability and a shareholder-friendly approach. VLTO faces competitive pressure from established players and new entrants in the PQI and digital workflow solution sectors. These competitors may offer similar or superior technologies at more competitive prices, limiting VLTO's market share and growth potential. As the industry becomes more crowded, the company could struggle to differentiate its offerings, which might lead to reduced customer loyalty or price compression. Competitive pressure may hinder VLTO's ability to maintain strong margins, ultimately affecting profitability and investor confidence. For risk-averse investors, the potential integration risks associated with VLTO's acquisition of TraceGains could be a deterrent. The uncertainty surrounding the integration process, such as potential operational disruptions, increased costs, or delays in realizing synergies, increases risk. If the integration faces challenges, it could negatively impact VLTO's short-term profitability and growth projections, creating volatility. VLTO carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. S&P Global SPGI reported better-than-expected first-quarter 2025 results. SPGI's adjusted EPS of $4.37 surpassed the Zacks Consensus Estimate by 3.6% and gained 9% year over year. Revenues of $3.8 billion beat the consensus estimate by 2% and grew 8.3% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Verisk VRSK has reported better-than-expected first-quarter 2025 results. VRSK's adjusted earnings were $1.73 per share, surpassing the Zacks Consensus Estimate by 3.6% and increasing 6.1% from the year-ago quarter. Total revenues of $753 million beat the consensus estimate marginally and increased 7% on a year-over-year basis. Interpublic IPG reported mixed first-quarter 2025 results. The company's earnings topped the Zacks Consensus Estimate, while revenues missed the mark. IPG's adjusted earnings of 33 cents per share surpassed the Zacks Consensus Estimate by 10% but decreased 8.3% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2 billion missed the consensus estimate by a slight margin and declined 20% year over year. Total revenues of $2.3 billion decreased 7.2% year over year but outpaced the Zacks Consensus Estimate of $2 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report S&P Global Inc. (SPGI) : Free Stock Analysis Report Veralto Corporation (VLTO) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
13-05-2025
- Business
- Yahoo
VLTO Q1 Earnings Call: Outperformance Driven by Broad-Based Growth, Tariff Mitigation in Focus
Water analytics and treatment company Veralto (NYSE:VLTO) reported Q1 CY2025 results topping the market's revenue expectations , with sales up 6.9% year on year to $1.33 billion. On the other hand, next quarter's revenue guidance of $1.32 billion was less impressive, coming in 1.3% below analysts' estimates. Its non-GAAP profit of $0.95 per share was 9.4% above analysts' consensus estimates. Is now the time to buy VLTO? Find out in our full research report (it's free). Revenue: $1.33 billion vs analyst estimates of $1.28 billion (6.9% year-on-year growth, 4.1% beat) Adjusted EPS: $0.95 vs analyst estimates of $0.87 (9.4% beat) Adjusted EBITDA: $343 million vs analyst estimates of $320.6 million (25.8% margin, 7% beat) Revenue Guidance for Q2 CY2025 is $1.32 billion at the midpoint, below analyst estimates of $1.34 billion Management reiterated its full-year Adjusted EPS guidance of $3.65 at the midpoint Operating Margin: 24.2%, in line with the same quarter last year Free Cash Flow Margin: 10.7%, up from 8.2% in the same quarter last year Market Capitalization: $24.87 billion Veralto's first quarter results were propelled by strong execution across its core water analytics and product quality infrastructure (PQI) segments. Management attributed the growth to disciplined commercial strategies, successful new customer wins, and a broad-based increase in demand across geographies and end markets. CEO Jennifer Honeycutt highlighted that both recurring revenue streams and equipment sales contributed significantly, with the marking and coding business delivering its fourth consecutive quarter of year-over-year growth in both consumables and equipment. The company also benefited from operational improvements and recent acquisitions, including TraceGains, which is tracking in line with expectations. Looking forward, Veralto maintained its full-year adjusted EPS outlook, but next quarter's revenue guidance was described as cautious in light of shifting global trade and tariff dynamics. Management emphasized ongoing countermeasures to offset tariff risks, including strategic pricing, supply chain adjustments, and a new U.S. manufacturing facility to increase flexibility. CFO Sameer Ralhan acknowledged that while demand trends remain steady, the company is modeling a range of scenarios to address potential headwinds from tariffs and global market uncertainties. Veralto's management credited the quarter's performance to both strategic actions and favorable market conditions. The company's approach to mitigating external risks and driving organic growth was a key theme throughout the call. Water treatment and analytics momentum: In North America, strong demand for chemical and ultraviolet (UV) water treatment solutions drove growth, especially from industrial customers and municipalities investing in water reuse and conservation. PQI segment execution: The marking and coding business showed sustained momentum, marking its fourth straight quarter of growth in both consumables and equipment. This was aided by improved consumer packaged goods market trends and enhanced commercial execution. Acquisition integration and expansion: The integration of TraceGains is progressing as planned, supporting new customer opportunities, while the planned acquisition of AQUAFIDES will expand Veralto's UV water treatment capabilities in Europe. Tariff countermeasures and supply chain agility: Management outlined detailed actions to address new tariffs, including shifting manufacturing to the U.S., implementing targeted price increases and surcharges, and leveraging flexible sourcing strategies. The new Grand Rapids factory was opened four months ahead of schedule to support these efforts. Recurring revenue focus: Recurring revenue streams, particularly consumables and software, grew at high single-digit rates year over year, underscoring the importance of a stable sales base amid macroeconomic uncertainty. Management's outlook for the coming quarters is shaped by global trade uncertainties, tariff impacts, and the resilience of core end markets like water treatment and consumer goods. Tariff mitigation strategies: The company is executing a mix of pricing actions, supply chain shifts, and manufacturing footprint changes to offset an estimated 3.5% sales exposure from new tariffs. Management believes these measures will limit margin pressure and support profitability. Steady demand in essential markets: Veralto expects continued demand for water analytics and treatment solutions, driven by long-term trends like water scarcity and infrastructure investment. The essential nature of its products supports recurring sales and stable customer relationships. M&A pipeline and capital allocation: With a strong balance sheet, management maintains a bias toward mergers and acquisitions, seeking opportunities in both core segments to drive future growth while remaining disciplined on valuation and integration. Scott Davis (Emilios Research): Asked about the timeline and effectiveness of tariff mitigation; management detailed a combination of pricing actions and supply chain adaptation, noting full mitigation may take up to six months. Deane Dray (RBC Capital Markets): Inquired about price elasticity and customer risk from tariff-driven price increases; CEO Honeycutt explained that high switching costs and the essential role of Veralto's products support pricing power, especially in consumables. Mike Halloran (Baird): Sought clarification on seasonality and the cadence between Q1 and Q2; CFO Ralhan responded that business seasonality is minimal and guidance reflects cautious planning given macro uncertainty. John McNulty (BMO Capital Markets): Asked about surprise growth drivers in Q1; management attributed upside to stronger-than-expected European water segment growth and improved commercial execution, rather than any pull-forward effects. Nathan Jones (Stifel): Questioned whether tariffs create competitive advantages; Honeycutt emphasized Veralto's asset-light model and agility in shifting manufacturing and supply, positioning the company to capitalize on market dislocations. Over the next few quarters, the StockStory team will be monitoring (1) the effectiveness of Veralto's tariff mitigation strategies and how quickly margin stability is restored, (2) continued demand trends in core water treatment and PQI markets as macroeconomic conditions evolve, and (3) the pace and impact of new product introductions and acquisition integrations, particularly with AQUAFIDES. We will also watch for any changes in recurring revenue trends and updates on capital deployment priorities. Veralto currently trades at a forward P/E ratio of 27×. In the wake of earnings, is it a buy or sell? The answer lies in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-04-2025
- Business
- Yahoo
1 S&P 500 Stock for Long-Term Investors and 2 to Avoid
While the S&P 500 includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds. Picking the right S&P 500 stocks requires more than just buying big names, and that's where StockStory comes in. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that could be in trouble. Market Cap: $52.04 billion Established in 1968, Royal Caribbean Cruises (NYSE:RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences. Why Are We Hesitant About RCL? Scale is a double-edged sword because it limits the company's growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 8.5% for the last five years Performance over the past five years shows its incremental sales were less profitable, as its 4% annual earnings per share growth trailed its revenue gains Negative returns on capital show management lost money while trying to expand the business Royal Caribbean's stock price of $193.75 implies a valuation ratio of 13.5x forward price-to-earnings. If you're considering RCL for your portfolio, see our FREE research report to learn more. Market Cap: $22.34 billion Spun off from Danaher in 2023, Veralto (NYSE:VLTO) provides water analytics and treatment solutions. Why Does VLTO Worry Us? Annual revenue growth of 3.3% over the last two years was below our standards for the industrials sector Demand will likely be soft over the next 12 months as Wall Street's estimates imply tepid growth of 2.5% Capital intensity has ramped up over the last four years as its free cash flow margin decreased by 2.1 percentage points At $90 per share, Veralto trades at 24.3x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than VLTO. Market Cap: $31 billion With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities. Why Do We Watch IT? Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 7.3% over the past two years Strong free cash flow margin of 20.8% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute Improving returns on capital reflect management's ability to monetize investments Gartner is trading at $401.80 per share, or 30.9x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
