I'll research Veralto (VLTO) before writing the preview. Let me gather recent earnings materials, filings, and news.I have the recent quarterly materials. Let me read the most recent (Q1 2026) earnings call and release, plus check the Q4 2025 release for guidance context.Let me get the year-ago Q2 2025 actuals for comparison, recent stock performance, and analyst expectations.Let me read the year-ago Q2 2025 release for the comparison base, and check recent news/analyst sentiment.I have what I need. Let me write the earnings preview.
Veralto heads into Q2 having already told investors what "good" looks like: management guided Q2 to non-GAAP core sales growth in the range of 3.0% to 4.0% year-over-year with adjusted operating profit margin of approximately ~23.5%, or flat to the prior year period, and adjusted diluted earnings per share in the range of $0.96 to $1.00 per share. The debate this quarter is less about whether Veralto hits that bar and more about whether the promised second-half core-growth acceleration is actually showing up, and whether a strong start plus FX tailwinds set up another full-year guidance raise.
| Metric | Q2 2026 Guide | Q2 2025 Actual | Implied Y/Y |
|---|---|---|---|
| Core sales growth | +3.0% to +4.0% | +4.8% | Decel. vs PY |
| Adj. operating margin | ~23.5% | 23.7% | ~Flat |
| Adj. diluted EPS | $0.96–$1.00 | $0.93 | +3% to +8% |
Year-ago context to anchor the print: sales increased 6.4% year-over-year to $1,371 million, with non-GAAP core sales growth of 4.8%; operating profit margin was 22.8% and non-GAAP adjusted operating profit margin was 23.7%; net earnings were $222 million, or $0.89 per diluted common share; non-GAAP, adjusted net earnings were $232 million, or $0.93 per diluted common share. Free cash flow was strong a year ago too — operating cash flow was $339 million and non-GAAP free cash flow was $323 million.
Note the seasonality: Q2 adjusted EPS is guided below the $1.07 Veralto just posted in Q1 — that's normal (Q2 2025 of $0.93 also stepped down from Q1 2025's $0.95), not a signal of deterioration.
Q1 2026 core growth was soft on the surface — sales increased 6.7% year-over-year to $1,422 million, with non-GAAP core sales growth of 1.9%. Management repeatedly framed that as a trough, insisting growth builds through the year. On the Q1 call: "Looking ahead, we expect core sales growth to accelerate as the year progresses." The Q2 guide of 3–4% core is the first proof point. Two drivers to scrutinize:
1. PQI recovery (the swing factor). PQI was the drag in Q1 — total sales growth of 1.7% but core sales decline of 1.0%. Management attributed it to a one-timer: packaging and color sales were down high single digits, primarily due to nonrecurring revenue, including sales of color testing and packaging inspection equipment, focused in a few discrete industrial end markets — automotive, textiles, building materials driven by the housing market. They insisted the core franchise is intact: "we don't see any changes relative to CPG demand, which would indicate our confidence in the marking and coding business continuing to be strong and, in fact, accelerate throughout the year." Watch for PQI core growth to flip positive and for marking & coding to re-accelerate. Also note a mix headwind was flagged for Q2 PQI margin.
2. Water Quality momentum. The clear Q1 winner — Water Quality total sales growth of 10.1% with core sales growth of 3.8%, aided by acquisitions (+3.0%) and hurt by currency (-3.3%). Management sees municipal as a mid-single-digit grower with incrementally stronger growth in muni wastewater due to recycle, reclaim and reuse drivers, and mid- to high single-digit growth on the industrial side with strength around data centers — including semiconductor, power and mining. Data centers are a hot narrative but small: data center revenue is still overall a very small portion of total sales in Water Quality. On the longer-cycle UV/Trojan business, remember timing — bookings seen now would be shipping largely in Q4 2027.
Full-year guide — raise again? After a strong Q1 they lifted the year to an adjusted EPS range of $4.20 to $4.28, up from the prior range of $4.10 to $4.20, with free cash flow conversion increased to approximately 100% of GAAP net earnings. The Q1 raise was "predominantly raised because of the operating stuff...the share buyback that we've done so far is already baked in." Watch for whether accelerating momentum + FX (see below) drives another bump.
FX turning tailwind. Currency was a meaningful drag in Q1 — a 3.5% total-company currency headwind. With the dollar softening through 1H, FX could flip toward neutral/tailwind, supporting reported sales and possibly EPS upside vs. guide.
Cost optimization program. New this year, but no 2026 P&L benefit — "we haven't baked any benefit from the program in 2026 in the guidance. You should expect roughly 50% of the run-rate savings in '27 and full run rate in 2028." The program is sized at a charge of $85 to $105 million yielding annual savings of $65 to $75 million by 2028. Management frames it as additive to the algorithm: think of it as a step change in '27 and '28, adding savings on top of the 30% to 35% incremental fall-through on core sales growth. Watch for any restructuring charge in Q2 results and confirmation actions remain Q4-weighted.
M&A / capital allocation. Veralto has been unusually active: ~$1 billion of capital deployed year-to-date — completing In-Situ and GlobalVision for ~$620 million and repurchasing $300 million of shares (1.3% of shares outstanding). The buyback authorization is largely spent; a new/expanded authorization is a possible catalyst, though management called it "a Board decision...in due course." The stated bias remains M&A. Also watch In-Situ/GlobalVision integration commentary (both are new; In-Situ carries an inventory step-up and a step-acquisition fair-value gain that will add non-GAAP add-backs).
Pricing & tariffs. Pricing should remain a tailwind — expect this year in aggregate to be at the high end of the ~100–200bps range, with PQI even exceeding that a little bit. Tariff exposure is now modest: on the new Section 232 stuff, the overall impact is actually much smaller...not like last year.
Geographies. China remains muted — China sales up low single digits in Q1, behaving like a more mature market, with Water Quality down slightly on weak muni funding. High-growth markets dipped in Q1 on timing/Latin America and tough India/Middle East comps.
VLTO has round-tripped in 2026: shares opened the year near $98.5, bottomed around $82 in late May/June, and have recovered to ~$94.3 into the print — roughly -4% YTD but ~+15% off the lows. The stock sold off hard on the Q4 report (Feb) but rose on the Q1 report (late April), so recent history says the market is rewarding execution. At ~$94 against a ~$4.24 FY midpoint, VLTO trades around ~22x forward EPS — a premium multiple that leaves little room for a soft core-growth number or a PQI miss. On the governance side, CEO Jennifer Honeycutt filed/executed a routine ~$674K planned (10b5-1) stock sale in mid-July — small and pre-scheduled, not a fundamental signal.
Given the ~7% total-sales/13% adjusted-EPS momentum management touted exiting Q1, the base case is a print at or modestly above the $0.96–$1.00 EPS guide, with the call's tone on PQI recovery, FX, and any full-year raise being the true share-price drivers.
Note: figures and guidance above are drawn from Veralto's Q1 2026 and Q2 2025 disclosures; Q2 2026 actuals were not yet available at the time of writing.