We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Veralto's Q2 Earnings Beat Estimates, Increase Year Over Year
Read MoreHide Full Article
Key Takeaways
Veralto's adjusted EPS rose 19.4% y/y to $1.11, beating the consensus estimate by 11%.
Water Quality sales climbed 10.1% to $908 million as core sales grew 5.7% y/y.
Full-year adjusted EPS guidance was raised to $4.35-$4.43, with core sales growth forecast at 4% to 4.5%.
Veralto (VLTO - Free Report) reported impressive second-quarter 2026 results, with both earnings and revenues beating the Zacks Consensus Estimate.
VLTO’s adjusted earnings of $1.11 per share topped the Zacks Consensus Estimate by 11% and increased 19.4% from the year-ago quarter, aided by core sales growth, operating execution and tariff refunds.
Veralto Corporation Price, Consensus and EPS Surprise
Sales of $1.47 billion surpassed the consensus estimate by 2.5% and rose 7.6% year over year. Core sales grew 4.2%, led by Water Quality growth of 5.7%, while acquisitions and currency movements also supported the top line.
VLTO’s shares have dipped 6.9% over the past year compared with the industry’s 9.3% decline. The Zacks S&P 500 composite has risen 18.7% over the same time frame.
VLTO's Pricing and Volume Support Core Growth
Core sales growth reflected a 3% contribution from pricing and a 1.2% increase in volume. Acquisitions added 2.4% to reported growth, driven mainly by In-Situ in Water Quality and GlobalVision in Product Quality and Innovation.
Foreign-currency movements provided a 1 percentage point benefit. Recurring revenues grew at a high-single-digit rate and represented 62% of total sales, while non-recurring revenues advanced at a mid-single-digit pace.
Veralto's Water Quality Segment Leads Results
Water Quality sales increased 10.1% year over year to $908 million. Core sales rose 5.7%, acquisitions contributed 3.2% and favorable currency translation added 1.2%. Price and volume contributed 2.9% and 2.8%, respectively.
Chemical water treatment solutions delivered 10.7% core growth, supported by broad-based industrial demand. The segment recorded double-digit growth across data centers, chemical processing, oil and gas and food and beverage markets. Adjusted operating profit increased 12.6% to $241 million, while the margin expanded 60 basis points to 26.5%.
VLTO's Product Quality Business Posts Modest Growth
Product Quality and Innovation sales rose 3.8% to $566 million. Core sales increased 2%, acquisitions added 1.2% and currency provided a 0.6 percentage point benefit. Pricing contributed 3%, partly offset by a 1% volume decline.
Marking and coding core sales grew 3.5%, with gains across equipment, consumables and services. However, lower sales of color-testing and packaging-inspection equipment weighed on packaging and color operations. Adjusted operating profit advanced 8.6% to $152 million and the adjusted margin increased 130 basis points to 26.9%.
Veralto's Margins Benefit From Tariff Refunds
Adjusted operating profit increased 11.7% to $363 million. The adjusted operating margin expanded 90 basis points to 24.6%, while the adjusted gross margin improved 160 basis points to 61.6%.
Refunds tied to tariffs previously collected under the International Emergency Economic Powers Act contributed 5 cents per share to adjusted earnings. They accounted for 110 basis points of gross-margin expansion, while price and volume leverage added another 50 basis points. Excluding the refunds, the underlying business generated 14% adjusted earnings growth.
Reported operating profit was $315 million, up from $313 million in the year-ago quarter. The reported operating margin contracted to 21.4% from 22.8%, reflecting restructuring charges and other adjustments.
Second-quarter costs included $29 million related to Veralto's 2026 Cost Optimization Program, $17 million of acquisition-related intangible amortization and $2 million associated with strategic initiatives. Reported net earnings increased to $241 million from $222 million, while diluted earnings rose to 98 cents from 89 cents.
Veralto's Cash Generation Supports Capital Deployment
Operating cash flow totaled $340 million, compared with $339 million a year earlier. Capital expenditures were $12 million, resulting in free cash flow of $328 million and a conversion rate of 136% of net earnings.
Veralto ended the quarter with $2.12 billion in cash, gross debt of $3.38 billion and net debt of $1.26 billion. During the quarter, it spent about $195 million to acquire GlobalVision, allocated $134 million to share repurchases and paid $32 million in dividends.
VLTO’s Q3 & Full-Year 2026 Outlook
For the third quarter of 2026, Veralto expects core sales growth of 4-5% and adjusted operating margin expansion of approximately 25 basis points.
Adjusted earnings are projected between $1.06 and $1.09 per share. The Zacks Consensus Estimate for the same is pegged at $1.00 per share.
For 2026, management raised its core sales growth forecast to 4-4.5% from 3-4.5%. Adjusted earnings guidance increased to $4.35-$4.43 from $4.20-$4.28, implying growth of 12% to 14%. The Zacks Consensus Estimate for the same is pegged at $4.24 per share.
The company expects adjusted operating margin expansion of 25-50 basis points and free cash flow conversion above 100% of GAAP net earnings.
WEX Inc. (WEX - Free Report) reported better-than-expected second-quarter 2026 results. WEX’s adjusted earnings of $5.35 per share outpaced the Zacks Consensus Estimate by 5.3% and increased 35.4% from the year-ago quarter. WEX’s revenues of $753.5 million topped the consensus estimate by 1.8% and improved 14.2% year over year.
Waste Connections, Inc. (WCN - Free Report) posted impressive second-quarter 2026 results. WCN’s adjusted earnings of $1.50 per share outpaced the consensus mark by 11.1% and rose 16.3% from the year-ago quarter. WCN’s total revenues of $2.56 billion surpassed the consensus mark by 1.1% and increased 6.4% year over year.
View the Zacks #1 Rank List
Image: Bigstock
Veralto's Q2 Earnings Beat Estimates, Increase Year Over Year
Key Takeaways
Veralto (VLTO - Free Report) reported impressive second-quarter 2026 results, with both earnings and revenues beating the Zacks Consensus Estimate.
VLTO’s adjusted earnings of $1.11 per share topped the Zacks Consensus Estimate by 11% and increased 19.4% from the year-ago quarter, aided by core sales growth, operating execution and tariff refunds.
Veralto Corporation Price, Consensus and EPS Surprise
Veralto Corporation price-consensus-eps-surprise-chart | Veralto Corporation Quote
Sales of $1.47 billion surpassed the consensus estimate by 2.5% and rose 7.6% year over year. Core sales grew 4.2%, led by Water Quality growth of 5.7%, while acquisitions and currency movements also supported the top line.
VLTO’s shares have dipped 6.9% over the past year compared with the industry’s 9.3% decline. The Zacks S&P 500 composite has risen 18.7% over the same time frame.
VLTO's Pricing and Volume Support Core Growth
Core sales growth reflected a 3% contribution from pricing and a 1.2% increase in volume. Acquisitions added 2.4% to reported growth, driven mainly by In-Situ in Water Quality and GlobalVision in Product Quality and Innovation.
Foreign-currency movements provided a 1 percentage point benefit. Recurring revenues grew at a high-single-digit rate and represented 62% of total sales, while non-recurring revenues advanced at a mid-single-digit pace.
Veralto's Water Quality Segment Leads Results
Water Quality sales increased 10.1% year over year to $908 million. Core sales rose 5.7%, acquisitions contributed 3.2% and favorable currency translation added 1.2%. Price and volume contributed 2.9% and 2.8%, respectively.
Chemical water treatment solutions delivered 10.7% core growth, supported by broad-based industrial demand. The segment recorded double-digit growth across data centers, chemical processing, oil and gas and food and beverage markets. Adjusted operating profit increased 12.6% to $241 million, while the margin expanded 60 basis points to 26.5%.
VLTO's Product Quality Business Posts Modest Growth
Product Quality and Innovation sales rose 3.8% to $566 million. Core sales increased 2%, acquisitions added 1.2% and currency provided a 0.6 percentage point benefit. Pricing contributed 3%, partly offset by a 1% volume decline.
Marking and coding core sales grew 3.5%, with gains across equipment, consumables and services. However, lower sales of color-testing and packaging-inspection equipment weighed on packaging and color operations. Adjusted operating profit advanced 8.6% to $152 million and the adjusted margin increased 130 basis points to 26.9%.
Veralto's Margins Benefit From Tariff Refunds
Adjusted operating profit increased 11.7% to $363 million. The adjusted operating margin expanded 90 basis points to 24.6%, while the adjusted gross margin improved 160 basis points to 61.6%.
Refunds tied to tariffs previously collected under the International Emergency Economic Powers Act contributed 5 cents per share to adjusted earnings. They accounted for 110 basis points of gross-margin expansion, while price and volume leverage added another 50 basis points. Excluding the refunds, the underlying business generated 14% adjusted earnings growth.
VLTO's Reported Profit Reflects Restructuring Costs
Reported operating profit was $315 million, up from $313 million in the year-ago quarter. The reported operating margin contracted to 21.4% from 22.8%, reflecting restructuring charges and other adjustments.
Second-quarter costs included $29 million related to Veralto's 2026 Cost Optimization Program, $17 million of acquisition-related intangible amortization and $2 million associated with strategic initiatives. Reported net earnings increased to $241 million from $222 million, while diluted earnings rose to 98 cents from 89 cents.
Veralto's Cash Generation Supports Capital Deployment
Operating cash flow totaled $340 million, compared with $339 million a year earlier. Capital expenditures were $12 million, resulting in free cash flow of $328 million and a conversion rate of 136% of net earnings.
Veralto ended the quarter with $2.12 billion in cash, gross debt of $3.38 billion and net debt of $1.26 billion. During the quarter, it spent about $195 million to acquire GlobalVision, allocated $134 million to share repurchases and paid $32 million in dividends.
VLTO’s Q3 & Full-Year 2026 Outlook
For the third quarter of 2026, Veralto expects core sales growth of 4-5% and adjusted operating margin expansion of approximately 25 basis points.
Adjusted earnings are projected between $1.06 and $1.09 per share. The Zacks Consensus Estimate for the same is pegged at $1.00 per share.
For 2026, management raised its core sales growth forecast to 4-4.5% from 3-4.5%. Adjusted earnings guidance increased to $4.35-$4.43 from $4.20-$4.28, implying growth of 12% to 14%. The Zacks Consensus Estimate for the same is pegged at $4.24 per share.
The company expects adjusted operating margin expansion of 25-50 basis points and free cash flow conversion above 100% of GAAP net earnings.
Veralto currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
WEX Inc. (WEX - Free Report) reported better-than-expected second-quarter 2026 results. WEX’s adjusted earnings of $5.35 per share outpaced the Zacks Consensus Estimate by 5.3% and increased 35.4% from the year-ago quarter. WEX’s revenues of $753.5 million topped the consensus estimate by 1.8% and improved 14.2% year over year.
Waste Connections, Inc. (WCN - Free Report) posted impressive second-quarter 2026 results. WCN’s adjusted earnings of $1.50 per share outpaced the consensus mark by 11.1% and rose 16.3% from the year-ago quarter. WCN’s total revenues of $2.56 billion surpassed the consensus mark by 1.1% and increased 6.4% year over year.