VERALTO CORPORATION (VLTO): what the price requires

At today's price, VERALTO CORPORATION (VLTO) is priced for +7.4% 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: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/VLTO

Headline

FieldValue
TickerVLTO
CompanyVERALTO CORPORATION
Current price$92.79/sh
CompositionNorth America 48% / Western Europe 23% / Other developed markets 2% / High-growth markets 27%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed15.9%
Operating margin today23.5%
Margin compression implied-7.6pp
Implied growth7.4%
Multiple paid19x 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 8.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7pp.

Reconcile: at the x-ray's 9.3% required return this reads ~14.3%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.71σ
cohort percentile (of 177 peers)29
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
Asset2.21x5expensive
Earnings2.21x5expensive
Relative1.59x5expensive
Growth0.97x3justifies

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$104.120.89xyesFCF base $1.1B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection
DCF Exit MultipleGrowth$96.000.97xyesExit EV/EBITDA: 16.2x / 18.2x / 20.2x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$71.471.30xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.0x / 18.0x / 21.0x (bear / base = reference held flat / bull), EV/EBITDA 13.86x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$42.042.21xyesBV/sh $12.06, ROE (TTM) 32.2%, ke 9.3%
Two-Stage Excess ReturnAsset$82.191.13xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$72.911.27xyesRev $5.6B, growth 6% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.1x / 4.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$46.561.99xyesEPS $3.88, growth 11% (input: historical EPS growth), PEG=2.21 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$47.511.95xyesNormalized EBIT (3y avg op income, one-time charges added back) $1.42B × (1−21%) / WACC 8.1% → EPV (no growth)
Residual IncomeAsset$64.781.43xyesBV $12.06 + 5yr PV of (ROE (TTM) 32.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$32.452.86xyes√(22.5 × EPS $3.88 × BVPS $12.06) — Graham's conservative floor
EV/EBITDA RelativeRelative$58.511.59xyesEBITDA $1.38B × sector EV/EBITDA 12.0x
FCF YieldEarnings$37.462.48xyesFCF $1042.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$34.252.71xyesSBC-adj FCF $0.97B (FCF $1.04B − SBC $0.07B) capitalized at Kₑ
Ben Graham FormulaEarnings$97.960.95xyesEPS $3.88 × (8.5 + 2×10.8%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$8.0211.57xyesBV $12.06 × (ROIC 5.4% / WACC 8.1%)
P/Sales SectorRelative$56.111.65xyesRevenue $5.59B × sector P/S 2.5x
PEG Fair ValueRelative$62.931.47xyesEPS $3.88 × (PEG 1.5 × growth 10.8% (input: historical EPS growth)) → PE 16.2x
Earnings YieldEarnings$41.952.21xyesEPS $3.88 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.2b
Net debt / NOPAT (after-tax)1.20x
Net debt / operating income (pre-tax)0.95x
Interest coverage13.0x
Share count CAGR (dilution)0.3%
Burning cashno

Bullet Takeaways

Bull Case

The cleanest way into Veralto is the direction of its earnings, because the trajectory is steady in a way that is rare and valuable. Q1 2026 sales rose 6.7% to about $1.42 billion, the operating margin held near 24% with an adjusted figure above 25%, and adjusted earnings reached $1.07 a share. Management raised full-year adjusted EPS guidance to a range of $4.20 to $4.28 and expects core sales growth to accelerate through the year toward a 3.0% to 4.5% range, with margin expansion on top. This is not a business lurching between boom and bust; it is one grinding earnings higher quarter after quarter, which is exactly the profile that justifies paying for durability.

What makes that durability real is the revenue model. Veralto sells the instruments, but it earns the steady money on the consumables, reagents, service and software that customers must keep buying to keep their water and their products in spec. Its own 10-K describes associates working alongside customers to tailor chemical treatment and dosing protocols, with solutions that helped customers save over 88 billion gallons of water in 2025. That is the language of an embedded, recurring relationship, not a one-time sale. Water Quality, the larger and faster half, grew about 10% in the quarter with strength in both municipal and industrial end markets, the kind of non-discretionary demand that holds up across cycles.

The capital engine is the third leg, and Veralto inherited Danaher's playbook for it. With interest covered about 14 times and net debt under one times operating income, the balance sheet has ample room, and management is using it: roughly $1 billion deployed into two acquisitions, In-Situ in Water Quality and GlobalVision in Product Quality, alongside opportunistic buybacks. Bolt-on M&A into a recurring-revenue base is the compounding flywheel, buying capability and customers that then feed the consumables stream. At a price implying only about 4.7% operating growth, the market is asking Veralto to do very little, while the business is built and guided to do considerably more.

Bear Case

The bear case is about narrative dependency, because the price is paying for a story of durable compounding that the static valuation frames cannot see. The X-ray says as much: asset-based and earnings-power methods both land at about half the price, the peer-multiple family well below it, and only the growth-DCF family reaches the quote. In other words, almost nothing about Veralto's current assets or current earnings justifies $83.99 (June 28, 2026) on their own; the premium is entirely a bet that the recurring base keeps compounding at attractive rates for years. The most fragile assumption baked into that story is that core organic growth, which was just 1.9% in the quarter against the 3.0% to 4.5% full-year guide, actually accelerates as promised. If it does not, the durability premium has nothing to stand on.

The softer half of the business is where the story is most exposed. Product Quality and Innovation grew only 1.7% in the quarter, with core sales actually declining about 1%. That segment serves packaging and consumer-goods customers whose own demand can wobble, and a flat-to-down core there drags the consolidated growth rate the whole thesis depends on. Buying GlobalVision adds capability, but acquisitions also paper over organic softness; a recurring-revenue compounder that needs M&A to hit its growth numbers is a different and lower-quality animal than one growing organically.

There is also a valuation-and-execution flag in the M&A itself. Veralto paid about $426 million for In-Situ, and several analysts described the deal as expensive even while calling it strategically aligned, trimming their price targets in response, with RBC and Citi both cutting after the prints. A company deploying roughly $1 billion at full prices, while buying back stock that trades near 27 times earnings, is making capital-allocation bets that have to clear a high bar to add value. The consensus has drifted toward hold for a reason: the business is excellent, but at this multiple the room for an organic-growth miss or an overpriced deal to disappoint is narrow.

Valuation

Veralto is a case where the implied assumption is modest but the X-ray still flags richness, and both readings are true at once. At $83.99 the market is paying about 17 times company-wide operating income, which under an 8.2% cost of capital and 4% terminal growth solves to roughly 4.7% annual operating growth over five years. That is a low bar for a business guiding to mid-single-digit core growth plus margin expansion, and the reliability on this solve is reasonable, so the implied figure can carry some weight.

The X-ray, however, shows how much of the price rests on the future. The asset-based and earnings-power families land near half the price and the peer-multiple family below it, while only the growth-DCF family reaches the quote. That is the standard shape for a high-quality compounder: the snapshot methods cannot price the recurring, consumables-driven moat, so the premium is paid for durable compounding they structurally miss.

The synthesis is that the entry price is reasonable if you trust the franchise and demanding if you do not. The two anchors pull gently in different directions: the inversion says the market is asking for very little growth, while the analyst consensus has cooled toward hold with targets clustered around $106 to $116 and a few recent trims tied to acquisition cost. The right read is that paying 17 times operating income, or roughly 27 times earnings, for a 23%-margin recurring-revenue business is fair value for the quality, not a bargain. The return then depends on whether organic core growth accelerates as guided and whether the M&A earns its price.

Catalysts

The recurring catalyst is organic growth re-accelerating. Q1 2026 sales rose 6.7% to about $1.42 billion, but core growth was only 1.9% against a full-year guide of 3.0% to 4.5%, and management expects the rate to build through the year. The single most important checkpoint is whether that acceleration shows up, especially in the softer Product Quality segment, which posted a slight core decline while Water Quality grew about 10%.

Capital deployment is the other operating driver. Veralto invested roughly $1 billion across two acquisitions, completing the $426 million In-Situ deal in Water Quality and agreeing to buy GlobalVision for about CAD $270 million in Product Quality, while running opportunistic buybacks. Watch integration and the returns on that capital, since bolt-on M&A into the recurring base is the compounding mechanism but also the place where overpaying would show up. Management also raised full-year adjusted EPS guidance to $4.20 to $4.28, so the next prints will test that bar.

Sentiment is a swing factor. The analyst consensus has cooled toward hold, with targets around $106 to $116 and several trims after the recent acquisitions, RBC and Citi among them, citing deal cost. A re-acceleration in core growth that validates the durability premium would be the catalyst that moves sentiment back toward buy; a continued organic-growth shortfall would do the opposite.

Peer Cohorts (Per Segment, With Filing Citations)

Water Quality (reported)

Product Quality & Innovation (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 VLTO report on boothcheck