Key Points
Brady (NYSE: BRC) exemplifies the type of steady, overlooked stock that investors often purchase, hold quietly, and later discover has generated strong long‑term returns. It appeals to conservative investors who want upside potential with limited downside risk.
The investment case for Brady
Brady specializes in printing, labeling, and identification products. Imagine a manufacturing facility that must label its machinery and cabling to simplify maintenance—possibly using virtual‑reality guidance. Similarly, labeling in sophisticated AI data centers, which accounts for about 20 % of Brady’s Americas and Asia sales, is another key application. In both scenarios, rapid asset identification speeds up service and cuts downtime.
It is an easy‑to‑overlook yet essential component of the industrial economy, underpinning the first two of the three reasons to consider buying the stock.
Organic growth prospects
Brady’s quarterly year‑over‑year organic growth has fluctuated between 1.5 % and a recent high of 8.2 %, situating it in the low‑ to mid‑single‑digit revenue growth range. While this is respectable, note that data centers represent roughly 20 % of Brady’s Americas and Asia sales (having grown 20 % in the latest quarter) and 13 % of its Europe‑Australia sales, highlighting a meaningful opportunity for data‑center labeling to boost growth.
Additionally, Brady can expand margins by increasing sales of high‑margin consumables for its printers and labeling equipment.
Image source: Getty Images.
The acquisition of Honeywell’s Productivity Solutions and Services Business is transformative
Industrial conglomerate Honeywell is undergoing a breakup and is divesting its Productivity Solutions and Services (PSS) unit to Brady for $1.4 billion—a price equal to just eight times last year’s EBITDA. Although PSS is non‑core to Honeywell’s automation division, its mobile computers, scanners, and printing solutions for large enterprises complement Brady’s offerings well.
Furthermore, the transaction will bring a new set of larger customers to Brady and broaden its solution portfolio. Factoring in an anticipated $25 million in cost savings—roughly 1 % of combined 2025 revenue—over three years, Wall Street projects slightly above 14 % annual earnings‑per‑share growth from 2025 through 2028.
Image source: Getty Images.
Valuation
Brady currently trades at an enterprise value of 12.6 times forward EBITDA, while the PSS acquisition is priced at eight times trailing EBITDA. The deal is both value‑accretive and earnings‑enhancing, with Wall Street estimating Brady will trade below 15 times its 2027 earnings—an attractive valuation for a firm with solid growth prospects.
Should you buy stock in Brady right now?
Before purchasing Brady shares, consider the following:
