Water analytics and treatment company Veralto (NYSE: VLTO) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 6.8% year on year to $1.42 billion. Its non-GAAP profit of $1.07 per share was 6.4% above analysts’ consensus estimates.
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Veralto (VLTO) Q1 CY2026 Highlights:
- Revenue: $1.42 billion vs analyst estimates of $1.4 billion (6.8% year-on-year growth, 1.6% beat)
- Adjusted EPS: $1.07 vs analyst estimates of $1.01 (6.4% beat)
- Adjusted Operating Income: $338 million vs analyst estimates of $343 million (23.8% margin, 1.5% miss)
- Management raised its full-year Adjusted EPS guidance to $4.24 at the midpoint, a 2.2% increase
- Operating Margin: 23.8%, in line with the same quarter last year
- Free Cash Flow Margin: 12%, up from 10.7% in the same quarter last year
- Market Capitalization: $21.4 billion
Company Overview
Spun off from Danaher in 2023, Veralto (NYSE: VLTO) provides water analytics and treatment solutions.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Veralto’s sales grew at a sluggish 4.4% compounded annual growth rate over the last four years. This was below our standard for the industrials sector and is a poor baseline for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Veralto’s annualized revenue growth of 5.3% over the last two years aligns with its four-year trend, suggesting its demand was consistently weak. 
This quarter, Veralto reported year-on-year revenue growth of 6.8%, and its $1.42 billion of revenue exceeded Wall Street’s estimates by 1.6%.
Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.
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Operating Margin
Veralto has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 22.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Veralto’s operating margin rose by 1.9 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q1, Veralto generated an operating margin profit margin of 23.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Veralto has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 17.3% over the last five years.
Taking a step back, we can see that Veralto’s margin expanded by 2.8 percentage points during that time. This is encouraging because it gives the company more optionality.
Veralto’s free cash flow clocked in at $170 million in Q1, equivalent to a 12% margin. This result was good as its margin was 1.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.
Key Takeaways from Veralto’s Q1 Results
It was encouraging to see Veralto beat analysts’ revenue expectations this quarter. We were also glad its full-year EPS guidance slightly exceeded Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its adjusted operating income fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 6.9% to $91.50 immediately following the results.
Is Veralto an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
