What Happened?
Shares of identification solutions manufacturer Brady (NYSE: BRC) fell 2.9% in the afternoon session after investors reacted to its fourth-quarter 2025 earnings report, which highlighted several challenges including declining margins and cash flow.
The report, released on September 5, showed the company's gross profit margin fell to 50.4% from 51.6% a year earlier, impacted by $8.9 million in facility closure and reorganization costs. Furthermore, both operating and free cash flow saw a significant decline in the fourth quarter compared to the previous year, which the company attributed primarily to an inventory build-up.
Looking ahead, Brady anticipates potential additional tariff impacts of $8 million to $12 million in fiscal year 2026, adding to concerns about future profitability amid what the company is describing as difficult trading conditions.
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What Is The Market Telling Us
Brady’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 3.1% on the news that the company reported second-quarter results that surpassed analyst estimates and provided upbeat guidance for the upcoming year. For the quarter, Brady posted revenue of $397.3 million, a 15.7% increase year-over-year, which beat Wall Street's expectations. The company also announced an adjusted earnings per share of $1.26, exceeding analysts' projections. Looking ahead, Brady issued an optimistic forecast for the 2026 financial year, guiding for adjusted earnings per share of $5.00 at the midpoint, which also surpassed consensus estimates.
Brady is up 8.6% since the beginning of the year, and at $79.81 per share, it is trading close to its 52-week high of $82.75 from September 2025. Investors who bought $1,000 worth of Brady’s shares 5 years ago would now be looking at an investment worth $1,729.
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