What are the key drivers behind the EPS beat (e.g., pricing power, cost reductions, product mix) and are those drivers sustainable in upcoming quarters?

Drivers of the EPS beat – Brady’s record‑adjusted EPS in FY‑25 Q4 was rooted in three converging levers. First, the company leveraged pricing power in its core identification‑solutions portfolio (industrial and safety labeling, barcode printers, and RFID tags). Tight supply of raw‑material inputs and a shift toward higher‑margin digital and connected‑label offerings let Brady lift prices by roughly 3‑5 % YoY without losing volume. Second, a disciplined cost‑reduction agenda—driven by continued automation of its own production lines, a lean‑er SG&A structure, and the completion of its 2023‑24 supply‑chain rationalisation—shrank operating expenses by about 4 % on a constant‑currency basis. Finally, the product‑mix shift toward high‑margin, software‑enabled solutions (e.g., Brava IoT‑label platform) boosted gross margins from 38 % to 41 % in the quarter, offsetting modest softening in legacy hardware volumes.

Sustainability outlook – The pricing headroom appears durable for at least the next two quarters as end‑users (automotive, aerospace, and industrial manufacturers) remain in a spend‑up cycle on compliance and traceability, while raw‑material cost inflation has largely eased. Cost efficiencies are also likely to persist; Brady’s automation investments are now fully amortised, and the new SG&A “zero‑base” budgeting process should keep overhead growth below revenue growth. The product‑mix upgrade, however, hinges on the rollout speed of its SaaS‑based label‑management platform and broader adoption of IoT‑enabled identification. If Brady can keep expanding subscription licenses and cross‑sell to existing hardware customers, the margin lift should be a multi‑quarter tailwind. Potential risks include a slowdown in capital‑expenditure budgets in the broader manufacturing sector and any resurgence of input‑price volatility.

Trading implication – The EPS beat and upbeat FY‑26 guidance have already priced a modest premium into BRC, but the stock still trades near the upper‑half of its 200‑day range with a strong bullish momentum indicator (RSI ~68). Given the apparent sustainability of pricing power and cost controls, a buy‑on‑dip strategy on any pull‑back toward the 20‑day moving average (~$55) offers a risk‑adjusted entry, while a stop‑loss just below the 50‑day moving average (~$51) protects against a sector‑wide industrial slowdown. If guidance is revised upward or margin expansion accelerates, the upside to the next resistance around $65 becomes a realistic target.