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Veralto Corporation (VLTO), headquartered in Waltham, Massachusetts, provides water analytics, water treatment, marking and coding, and packaging and color services. Valued at $27.4 billion by market cap, the company offers product quality control systems and water purification equipment.
Shares of this global leader in essential water and product quality solutions have outperformed the broader market considerably this year. VLTO has gained 35.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17.2%. Over the past six months, VLTO stock has risen by 27.1%, surpassing SPX’s 10.3% gains during the same period.
Zooming in further, VLTO’s outperformance looks more pronounced when compared to the VanEck Environmental Services ETF (EVX). The exchange-traded fund has gained about 16.7% on a YTD basis. Moreover, VLTO’s gains over the past six months outshine the ETF’s 11.5% returns over the same time frame.
VLTO’s overall performance can be attributed to the durability of its businesses, fortified by strong commercial and operational execution, thanks to positive volume and price increases that are in line with historical levels. Moreover, the deployment of the Veralto Enterprise System with increased rigor has also been instrumental in driving growth and expanding margins. The company has benefitted from the on-going recovery in consumer-packaged goods markets, improved sentiment from brand owners, and strong bookings in its packaging and color solutions business.
On Jul. 25, VLTO shares closed up marginally after reporting its Q2 results. Its adjusted EPS of $0.85 surpassed Wall Street expectations of $0.81. The company’s revenue stood at $1.3 billion, up 2.8% year over year. For Q3, VLTO expects its adjusted EPS to be between $0.82 and $0.86 and anticipates core sales growth in the low-to-mid single-digits. The company maintained its full-year core sales growth target of low single-digits and raised its adjusted EPS guidance, expecting it to be between $3.37 and $3.45.
For the current fiscal year, ending in December, analysts expect VLTO’s EPS to grow 8.2% to $3.45 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last three quarters.
Among the 14 analysts covering VLTO stock, the consensus is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings and seven “Holds.”
On Aug. 12, UBS Group AG (UBS) analyst Damian Karas initiated a “Hold” rating on VLTO with a price target of $118, implying a potential upside of 6.1% from current levels.
The mean price target of $111.83 represents a marginal premium to VLTO’s current price levels. The Street-high price target of $125 suggests an upside potential of 12.3%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
