BRADY CORP (BRC): what the price requires

At today's price, BRADY CORP (BRC) is priced for +6.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/BRC

Headline

FieldValue
TickerBRC
CompanyBRADY CORP
Current price$90.44/sh
CompositionSafety and Facility Identification 40% / Product Identification 28% / Wire Identification 16% / Healthcare Identification 9% / People Identification 6%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed8.8%
Operating margin today16.8%
Margin compression implied-8.0pp
Implied growth6.2%
Multiple paid16x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.3pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.22σ
cohort percentile (of 225 peers)26
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.70x4expensive
Earnings2.11x3expensive
Relative1.33x3expensive
Growth0.89x3justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$101.190.89xyesFCF base $0.2B, growth 11% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection
DCF Exit MultipleGrowth$105.310.86xyesExit EV/EBITDA: 11.8x / 13.8x / 15.8x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$67.841.33xyesP/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$47.411.91xyesBV/sh $28.11, ROE (TTM) 15.6%, ke 9.3%
Two-Stage Excess ReturnAsset$60.801.49xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$81.831.11xyesRev $1.6B, growth 11% (input: historical growth; tapered), Terminal P/S: 2.2x / 2.7x / 3.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$43.252.09xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.23B × (1−21%) / WACC 9.1% → EPV (no growth)
Residual IncomeAsset$62.051.46xyesBV $28.11 + 5yr PV of (ROE (TTM) 15.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$85.171.06xyesEBITDA $0.31B × sector EV/EBITDA 13.0x
FCF YieldEarnings$42.822.11xyesFCF $181.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$39.722.28xyesSBC-adj FCF $0.17B (FCF $0.18B − SBC $0.01B) capitalized at Kₑ
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$14.196.37xyesBV $28.11 × (ROIC 4.6% / WACC 9.1%)
P/Sales SectorRelative$67.841.33xyesRevenue $1.62B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$148.6m
Net debt / NOPAT (after-tax)-0.70x (net cash)
Net debt / operating income (pre-tax)-0.55x (net cash)
Interest coverage61.4x
Share count CAGR (buyback)-1.9%
Burning cashno

Bullet Takeaways

At about $85 the market pays roughly 15 times operating income, which implies only about 4.6% annual operating growth for five years. Brady just grew organic sales 8.2% and raised guidance, so the implied bar is below what the business is delivering.

The moat is in the boring, mission-critical niche. Brady makes identification and safety products, labels, signs, tags, that customers need but barely notice in cost terms, which supports a 16.2% operating margin and a 15.6% return on equity across five segments.

The balance sheet is a fortress: net cash of about $149 million, almost no debt, and interest coverage of 57 times. The structural question is not solvency, it is whether management deploys that idle cash productively, as it just did with the Gravotech acquisition.

Bull Case

Start with the moat, because it is the durable kind that hides in plain sight. Brady makes identification and safety products: labels, signs, tags, wire markers, and the printers and software that produce them, sold across Safety and Facility Identification, Product Identification, Wire Identification, Healthcare Identification, and People Identification. None of it is glamorous, and that is the point. These are low-cost, mission-critical consumables that customers must have to operate safely and to comply with regulations, but which represent a tiny fraction of their total spend. That combination, essential but cheap, gives Brady pricing power and recurring demand, which is why it earns a 16.2% operating margin and a 15.6% return on equity in a category most investors overlook.

The growth is outpacing what the price assumes. In the third quarter of fiscal 2026, sales rose 13.8% to $435.2 million, with organic growth of 8.2%, acquisitions adding 2.1%, and favorable currency adding 3.5%. Net income rose to $57.8 million, diluted EPS to $1.21, and adjusted diluted EPS jumped 23% to a record $1.50, prompting management to raise full-year guidance. Set that against the inversion, which reads the price as embedding only about 4.6% annual operating growth. A company delivering 8.2% organic growth while the price assumes less than 5% has a favorable gap between expectation and execution.

The balance sheet gives management the firepower to compound. Brady holds net cash of about $149 million against almost no debt, with interest coverage of 57 times, a fortress position for an industrial. It used that capacity to acquire Gravotech for roughly 130 million dollars, a specialist in precision marking and engraving that extends Brady's product-identification franchise. The asset, earnings-power, and peer-multiple frames all read the stock as richly valued, with only the growth-DCF reaching the price, which the engine characterizes as a moat-and-durability premium. That is the bull thesis in one line: a debt-free, high-margin niche leader compounding organically and through disciplined acquisitions, priced for the kind of durable growth the static frames cannot capture.

Bear Case

The balance sheet is a fortress, so the structural question is not whether Brady can survive but what it does with its capital. Net cash of about $149 million sitting on the balance sheet earns very little, and a pile of idle cash is a drag on return on equity until it is deployed. Brady's answer is acquisitions, most recently Gravotech for roughly 130 million dollars, and that is where the structural risk lies. Acquisitions must be integrated and must earn their cost of capital, and a serial acquirer that overpays or fails to integrate destroys the value its idle cash was supposed to create. The market is paying a premium that, per the engine, only the growth-DCF can justify, which means the durability premium rests partly on management continuing to deploy cash into deals that work. That is an execution dependency, not a guarantee.

The second structural consideration is the nature of the asset base. Brady is a manufacturer of physical products and materials, which means it carries inventory, factories, and working capital that an asset-light software business does not. The reported trailing earnings even dipped negative on a one-time charge, a reminder that a hardware-and-materials business has lumpier accounting than its steady demand suggests. Free cash flow of about $181 million is solid, but capitalized at the cost of equity the FCF Yield model lands at just $43, less than half the price, which tells you the standalone, no-growth cash generation does not support the valuation. The entire premium is the growth and durability bet.

The third risk is the demand cyclicality beneath the steady-niche story. Brady's customers span manufacturing, construction, healthcare, and industrial end markets, and while identification products are recurring, volumes still soften in an industrial downturn. The 8.2% organic growth and 3.5% currency tailwind in the latest quarter both flatter the trend, and currency in particular can reverse. The static value frames are uniformly cautious: Earnings Power Value at $43, Simple Excess Return at $47, Two-Stage Excess Return at $61, all well below the price. The business is genuinely high quality and financially unbreakable, so this is not a distress case. It is a valuation-and-capital-deployment case: a debt-free niche leader priced for durable compounding, where the risk is paying up for growth that depends on continued organic momentum and disciplined acquisition of the idle cash.

Valuation

Brady is priced as a whole company on its operating earnings. At about $85 (June 27, 2026) the market pays roughly 15 times company-wide operating income, which inverts to operating-profit growth of about 4.6% per year for five years at an 8.9% cost of capital. Each percentage point of cost of capital moves that implied growth by about 6.1 points. The assumed pace is within what Brady has recently delivered, and the company is in fact growing organic sales faster, at 8.2%, so the implied bar is undemanding relative to execution.

The model spread is the classic moat-premium pattern. The asset and earnings-power frames sit well below the price: Earnings Power Value at $43, FCF Yield at $43, Simple Excess Return at $47, Two-Stage Excess Return at $61, and Residual Income at $62. The relative frame is mixed, with EV/EBITDA Relative landing right at the price near $85 and a price-to-sales fallback at $68. Only the growth-DCF family reaches the price, with DCF Perpetual Growth at $101 and DCF Exit Multiple at $101. The characterization is explicit: asset, earnings-power, and peer-multiple models all say richly valued, and only the growth-DCF reaches the price, a moat-and-durability premium.

The reconciliation is that the business is a high-quality compounder whose value comes from durable growth and capital deployment, not from its no-growth earnings power. The deciding variables are organic sales growth holding above the implied 4.6%, the productive deployment of the net-cash balance through acquisitions like Gravotech, margin durability, and the cyclicality of Brady's industrial and healthcare end markets.

Catalysts

Third-quarter fiscal 2026 results, for the quarter ended April 30, 2026, were the recent driver and they were strong. Sales rose 13.8% to $435.2 million, with organic growth of 8.2%, acquisitions adding 2.1%, and currency adding 3.5%. Net income rose to $57.8 million, diluted EPS rose to $1.21 from $1.09, and adjusted diluted EPS jumped 23% to a record $1.50, prompting management to raise full-year guidance. Continued organic growth above the implied rate is the key marker for whether the durability premium is earned.

The Gravotech acquisition is the recent capital-deployment catalyst. Brady completed the purchase of Gravotech Holding, a leader in specialized marking and engraving, for roughly 120 million euros, about 130 million dollars, extending its product-identification franchise into precision direct-part marking. The integration and contribution of Gravotech, and any further use of the net-cash balance, are forward swing factors.

The watch items are organic sales growth against the raised guidance, the integration and returns of the Gravotech acquisition, operating-margin durability, currency effects on reported growth, end-market demand across manufacturing, healthcare, and industrial customers, and the deployment of the net-cash balance. Sources: Brady Q3 fiscal 2026 results and 8-K (stocktitan.net), Gravotech acquisition coverage (stocktitan.net, investing.com, finance.yahoo.com, bradyid.com).

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive BRC report on boothcheck