Brady (BRC)

Identification solutions manufacturer Brady (NYSE:BRC) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 7.5% year on year to $405.3 million. Its non-GAAP profit of $1.21 per share was 1.7% above analysts’ consensus estimates.

Company Overview

Founded in 1914 and evolving through more than a century of industrial innovation, Brady (NYSE:BRC) manufactures and supplies identification solutions and workplace safety products that help companies identify and protect their premises, products, and people.

Rising concerns over physical security, cybersecurity threats, and workplace safety regulations will present opportunities for companies in this sector. AI and digitization will enhance surveillance, access control, and threat detection, which could benefit key players in Safety & Security Services. These trends could also introduce ethical and regulatory concerns over data privacy and automated decision-making in security operations, giving rise to headline risks. Finally, increasing scrutiny on private security practices and evolving criminal justice policies again mean that companies in the space need to operate with the utmost care or risk being the poster child of abuse of power.

Brady's competitors include 3M (NYSE: MMM) in safety and identification products, Avery Dennison (NYSE: AVY) in labeling and identification solutions, and Honeywell (NASDAQ: HON) in workplace safety equipment, along with regional players in specific market segments.

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $1.54 billion in revenue over the past 12 months, Brady is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, Brady grew its sales at a solid 7.5% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Brady’s annualized revenue growth of 7.2% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, Brady reported year-on-year revenue growth of 7.5%, and its $405.3 million of revenue exceeded Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Brady has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average operating margin of 16.5%.

Looking at the trend in its profitability, Brady’s operating margin rose by 3.1 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Brady generated an operating margin profit margin of 16.8%, up 1.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Brady’s EPS grew at an astounding 15.7% compounded annual growth rate over the last five years, higher than its 7.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Brady’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Brady’s operating margin expanded by 3.1 percentage points over the last five years. On top of that, its share count shrank by 8.7%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Brady, its two-year annual EPS growth of 11.1% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Brady reported adjusted EPS of $1.21, up from $1.12 in the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects Brady’s full-year EPS of $4.69 to grow 9.3%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Brady has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 11% over the last five years, quite impressive for a business services business.

Taking a step back, we can see that Brady’s margin dropped by 1.5 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Brady’s free cash flow clocked in at $22.38 million in Q3, equivalent to a 5.5% margin. This result was good as its margin was 1.2 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Brady hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked. Its five-year average ROIC was 18.5%, higher than most business services businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Brady’s ROIC increased by 1.8 percentage points annually over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Brady is a profitable, well-capitalized company with $182.7 million of cash and $176.8 million of debt on its balance sheet. This $5.9 million net cash position gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We enjoyed seeing Brady beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $75 immediately after reporting.

Updated: December 3, 2025 at 10:17 PM EST

When considering an investment in Brady, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

We think Brady is a solid business. To kick things off, its revenue growth was solid over the last five years. And while its organic revenue growth has disappointed, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders. On top of that, its strong operating margins show it’s a well-run business.

Brady’s P/E ratio based on the next 12 months is 15.2x. Looking at the business services space right now, Brady trades at a compelling valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $96 on the company (compared to the current share price of $78.59), implying they see 22.2% upside in buying Brady in the short term.