A month has gone by since the last earnings report for Veralto (VLTO Quick QuoteVLTO - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Veralto due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Veralto Corporation before we dive into how investors and analysts have reacted as of late.

VLTO Beats Q2 Earnings Estimates

Veralto 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.

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 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.

VLTO’s adjusted earnings are projected between $1.06 and $1.09 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 company expects adjusted operating margin expansion of 25-50 basis points and free cash flow conversion above 100% of GAAP net earnings.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Veralto has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Veralto has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.