Core Viewpoint - Kewaunee Scientific Corporation (KEQU) has received an upgrade to "Outperform" due to strong acquisition execution, sustained margin improvement, a record backlog providing revenue visibility, and partial insulation from macroeconomic challenges through healthcare exposure [1]. Acquisition Execution & Strategic Fit - The acquisition of Nu Aire, Inc. in November 2024 has resulted in a 30.7% year-over-year increase in domestic segment sales, reaching $179.4 million in fiscal 2025 [2]. - This acquisition has expanded KEQU's product portfolio to include higher-margin products like biological safety cabinets, CO2 incubators, and ultralow freezers, while also establishing new distribution partners in previously underpenetrated markets [3]. - Integration progress has exceeded expectations, creating early cross-selling opportunities and reinforcing KEQU's position as a full-spectrum laboratory solutions provider [3]. Gross Margin Expansion & Profitability Gains - KEQU's gross margin has expanded by 310 basis points to 28.6% in fiscal 2025 from 25.5% in fiscal 2024, driven by Nu Aire's favorable product mix, operational efficiencies, and disciplined cost control, despite incurring $6 million in one-time integration and purchase accounting expenses [4]. - Adjusted EBITDA increased by 28.4% to $26.5 million, representing 10.9% of sales, indicating the company's ability to convert top-line gains into higher operating leverage [5]. - The annuitization of the company's pension obligation in fiscal 2024 has reduced earnings volatility, providing a cleaner base for future margin expansion [5]. Record Backlog & Revenue Visibility - KEQU has a record backlog of $214.6 million at the end of fiscal 2025, up 37.9% from the previous year, providing exceptional near-term revenue visibility, with management expecting 93% of orders to convert into revenues in fiscal 2026 [6]. - The backlog includes diverse end markets such as healthcare, pharmaceuticals, and education, which helps mitigate cyclicality often seen in the broader construction and industrial sectors [6]. - The healthcare and life sciences sectors, enhanced by Nu Aire's capabilities, have shown greater resilience against macroeconomic uncertainty, providing KEQU with a degree of macro immunity [7]. Conclusion - Kewaunee's transformation following the Nu Aire acquisition, along with strong domestic performance, expanding margins, record backlog, and attractive valuation, supports an Outperform rating [10]. - The company is positioned to deliver above-market returns over the next 12 months, with key catalysts including backlog conversion and incremental synergies from the Nu Aire integration [10].

Core Insights - RH is implementing diverse in-house strategies to ensure margin expansion amid high mortgage rates, tariff-related risks, and inflationary pressures [1] - The company is focusing on global expansion, a customer-friendly membership approach, and supply-chain optimization to increase revenue visibility [1] Group 1: Financial Performance - In Q1 2025, RH's adjusted EBITDA margin expanded by 80 basis points year-over-year to 13.1% [1][8] - The company expects its adjusted EBITDA margin for FY25 to be between 20% and 21%, up from 16.9% reported last year [4][8] - Earnings estimates for fiscal 2025 have trended upward to $10.87 per share, indicating robust 101.7% year-over-year growth [11] Group 2: Market Expansion - Demand in Europe has grown by 60% across RH Munich and RH Dusseldorf, with continued growth in RH Brussels and RH Madrid [2] - RH plans to open new locations in Paris in September 2025, and two more in London and Milan in 2026 [2] Group 3: Supply Chain Strategy - RH is shifting its sourcing out of China, expecting receipts to reduce from 16% in Q1 2025 to 2% by Q4 2025 [3][8] - By the end of 2025, RH projects that 52% of its upholstered furniture will be produced in the U.S. and 21% in Italy [3] Group 4: Competitive Positioning - RH shares have gained 13.9% in the past month, outperforming the Hoya Capital Housing ETF (HOMZ) [5] - In comparison, shares of competitors Williams-Sonoma and Arhaus have increased by 3.8% and 2.2%, respectively [6] Group 5: Valuation Metrics - RH stock is currently trading at a forward 12-month P/E ratio of 15.3X, which is lower than Williams-Sonoma's 18.83X and Arhaus's 19.66X [9] - The discounted valuation of RH stock compared to other market players presents a promising opportunity for investors [9]