Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures
Veralto (VLTO): Scaling Recurring Revenue Leadership Through Strategic SaaS Acquisition – Will Digital Synergies Unlock the Next Phase of Growth?
Veralto (VLTO) delivered a robust Q3 2024, with 4.6% core sales growth, 24.1% adjusted operating margins (+170 bps YoY), and adjusted EPS of $0.89, beating estimates by $0.04. Recurring revenues, now 61% of total sales, grew mid-single digits, underscoring the durability of Veralto’s business model. Segment highlights include 5.7% core sales growth in Product Quality & Innovation (PQI) and a 490-bps margin expansion to 27.7%, driven by leadership in packaging and coding solutions. The Water Quality segment grew 4%, supported by industrial water treatment demand, though constrained by slower municipal funding in China (-3%). Strategically, the acquisition of TraceGains, a SaaS platform for regulatory compliance, aligns with digitization trends and adds a high-value recurring revenue stream (95%) with 80% gross margins. Synergies with Esko and integration through the Veralto Enterprise System (VES) are expected to accelerate growth and profitability. Risks include near-term margin headwinds from TraceGains integration, equipment sales mix, and China’s sluggish municipal funding, but robust cash flow and a conservative balance sheet (net leverage 1.1x) provide flexibility for growth investments. Can Veralto successfully leverage digital synergies and its disciplined M&A framework to drive sustained growth and margin expansion in evolving high-growth markets?
