Umnat Seebuaphan/iStock via Getty Images “May all your delulu come trululu.” – Gen-Alpha To My Partners and Friends: Black Bear Value Fund, LP (the “Fund”) returned -7.1% in September, -1.0% in the quarter and -12.7% year-to-date. The S&P 500 returned +3.6% in September, +8.1% in the quarter and +14.8% year-to-date. The HFRI Index returned +1.3% in September, +5.9% in the quarter and +13.7% year-to-date. We do not seek to mimic the returns of the S&P 500, and there will be variances in our performance. ...

Core Insights - RPM International Inc. is a global leader in specialty coatings, sealants, and building materials, operating through various segments including industrial, consumer, and specialty products, with significant competition from companies like Sherwin-Williams and PPG Industries [1] Financial Performance - RPM is set to release its quarterly earnings on October 1, 2025, with analysts estimating earnings per share (EPS) to be $1.87, reflecting a 1.6% increase from the previous year, indicating stability in EPS estimates over the past 30 days [2][6] - The company's revenue is projected to reach approximately $2.05 billion, marking a 3.8% year-over-year increase, which is a positive indicator of operational strength [3][6] Market Valuation - RPM's price-to-sales ratio is 2.04, suggesting that investors are willing to pay $2.04 for every dollar of sales, reflecting confidence in the company's revenue-generating capabilities [3] - The price-to-earnings (P/E) ratio stands at 21.64, indicating that investors are paying $21.64 for each dollar of earnings, while the enterprise value to sales ratio is 2.40 and the enterprise value to operating cash flow ratio is 23.02, highlighting RPM's valuation in relation to its sales and cash flow [4] Financial Health - The company's debt-to-equity ratio of 1.03 indicates a balanced approach to financing, utilizing both debt and equity, and a current ratio of 2.16 suggests a strong ability to cover short-term liabilities with its assets [5]

Core Insights - Home Depot and Floor & Decor are significant players in the Retail - Home Furnishings industry, with Home Depot being the largest home improvement retailer globally, while Floor & Decor specializes in hard-surface flooring [1][2]. Home Depot Overview - Home Depot has a market capitalization of approximately $409 billion and operates over 2,300 stores, offering a wide range of building materials, tools, appliances, and décor products [1]. - For fiscal 2025, Home Depot anticipates total sales growth of about 2.8%, comparable sales growth of roughly 1%, and an adjusted operating margin of 13.4% [3]. - In Q2, Home Depot's sales increased by 4.9% year-over-year to $45.3 billion, with 1% growth in overall comparable sales [4]. - The company is focusing on digital transformation, with online comparable sales rising about 12% in the quarter, enhancing customer satisfaction and engagement [5]. - The professional customer segment is a major growth driver, with significant spending increases observed among Pro customers utilizing trade credit facilities [6]. Floor & Decor Overview - Floor & Decor has a market capitalization of around $8.8 billion and operates over 250 warehouse-format stores, focusing on the hard-surface flooring market [2]. - In Q2, Floor & Decor reported a 7.1% year-over-year increase in net sales and an 11.5% rise in earnings per share, aided by margin expansion [9]. - The company plans to open 20 new warehouse stores in fiscal 2025 and at least another 20 in 2026, contributing to revenue and market share growth [10]. - Floor & Decor is benefiting from high-margin verticals, particularly design services and commercial projects, with design-driven sales growing rapidly [11]. - Management forecasts fiscal 2025 revenues between $4.66 billion and $4.75 billion, reflecting 5-7% year-over-year growth [12]. Comparative Performance - Over the past six months, Home Depot shares have increased by 13.9%, while Floor & Decor shares have decreased by 1.2%, contrasting with the overall industry growth of 12.5% [20]. - Home Depot's forward P/E ratio is 25.86, while Floor & Decor's is 39.17, indicating differing valuations [21]. - Home Depot's scale, diversified offerings, and digital capabilities provide resilience against economic fluctuations, while Floor & Decor faces challenges from a weak housing market and discretionary spending pressures [22].

Core Viewpoint - BuildDirect.com Technologies Inc. has granted 45,000 deferred share units (DSUs) to two directors as part of its Omnibus Equity Incentive Plan, indicating a commitment to align director compensation with company performance [1][2]. Company Overview - BuildDirect is an expanding omnichannel building materials retailer, focusing on Pro Centers that serve professional contractors and trades [3]. - The company is pursuing growth through both organic means and strategic acquisitions, aiming to enhance efficiency and expand its market presence [3].

Group 1 - The Home Depot, Inc. has completed the acquisition of GMS Inc. for $5.5 billion, enhancing its position in the building materials distribution sector [2][3] - The acquisition allows The Home Depot to better serve professional contractors and unlock cross-selling opportunities [3] - Nearly 80% of GMS shares were tendered, facilitating its integration as a wholly owned subsidiary of The Home Depot [3] Group 2 - The Home Depot is recognized as one of the best stocks for financial stability and investment [1][4] - The company operates as the world's largest home improvement retailer, providing a wide range of building materials and professional solutions [4]

Group 1 - The Home Depot, Inc. (NYSE:HD) is a prominent home improvement retailer that offers a wide range of products including building materials, home décor, lawn and garden products, and maintenance items [2] - The company also provides installation services, tool rental options, and digital platforms catering to homeowners, professional tradespeople, and contractors [2] - Recent commentary from Jim Cramer indicates hesitancy regarding interest rate-sensitive cyclicals, including housing stocks, suggesting that there is no strong reason to be optimistic about these sectors at this time [1] Group 2 - Despite the potential of Home Depot as an investment, there are opinions that certain AI stocks may present greater upside potential and lower downside risk [3] - The article suggests that investors looking for undervalued AI stocks that could benefit from current economic trends should consider alternatives to Home Depot [3]

Group 1: Company Performance - Amrize Ltd (AMRZ) has seen its current year earnings estimate revised downward by 8.2% over the last 60 days [1] - Hormel Foods (HRL) has experienced a downward revision of almost 7.5% in its current year earnings estimate over the last 60 days [2] - Leggett & Platt (LEG) has had its current year earnings estimate revised downward by almost 5.4% over the last 60 days [3] Group 2: Industry Insights - Amrize Ltd operates primarily in the building materials business in North America [1] - Hormel Foods is a leading manufacturer and marketer of various meat and food products in both U.S. and international markets [2] - Leggett & Platt is a global manufacturer that designs and produces a wide variety of engineered components and products for homes, offices, and automobiles [3]

Core Viewpoint - Home Depot is experiencing a recovery in same-store sales, marking three consecutive quarters of positive growth in the U.S. market, indicating a potential turnaround for the company [1][4][10]. Group 1: Same-Store Sales Performance - Home Depot's same-store sales had declined for eight consecutive quarters before showing improvement, with a 1.4% growth in fiscal Q2 [3][4]. - The company reported a 1.0% increase in global comparable-store sales during the same period [4]. - The average ticket size increased by 1.4%, although the number of transactions fell by 0.4% [5]. Group 2: Revenue and Earnings - Total revenue for Home Depot rose by 4.9% year-over-year to $45.28 billion, while adjusted earnings per share (EPS) increased to $4.68, missing analyst expectations [9]. - The company maintained its full-year guidance for a 2.8% sales growth and a 1.0% increase in same-store sales, alongside a projected 2% decline in adjusted EPS [9]. Group 3: Product Categories and Consumer Behavior - 12 out of 16 product categories recorded positive same-store sales growth, with 13 out of 16 in the U.S. also showing improvement [7]. - Sales of big-ticket items (costing $1,000 or more) increased by 2.6%, driven by strength in building materials, lumber, and hardware [6]. - Economic uncertainty is causing consumers to delay larger discretionary projects, impacting sales in areas like kitchen and bathroom remodels [6]. Group 4: Market Outlook - The Leading Indicator of Remodeling Activity (LIRA) suggests an improving home remodeling market over the next 12 months, although challenges remain [11]. - Home Depot's stock trades at a forward price-to-earnings (P/E) ratio of about 27 times fiscal 2025 estimates, which is considered high given the current economic uncertainty [13]. - Despite operational improvements, the stock may remain range-bound without significant breakout potential in the near term [14].

Core Insights - Pool Corporation reported a modest beat on revenue and earnings per share (EPS) for Q2 2025, with revenue at $1.79 billion and adjusted EPS at $5.17, surpassing analyst expectations of $1.78 billion and $5.09 respectively [1][2] - The company trimmed its full-year 2025 earnings outlook based on second-quarter performance and expectations for the remainder of the year [1][12] Financial Performance - Adjusted EPS for Q2 2025 was $5.17, a 3.8% increase from $4.98 in Q2 2024 [2] - Revenue totaled $1.79 billion, reflecting a year-over-year increase of 0.6% from $1.77 billion in Q2 2024 [2] - Gross margin remained stable at 30%, while operating margin was unchanged at 15.3% [2][7] - Net income for Q2 2025 was $194.3 million, a slight increase from $192.4 million in Q2 2024 [2][7] Business Operations - Pool operates 451 sales centers across North America, Europe, and Australia, focusing on chemicals, equipment, parts, and building materials for pool professionals and retailers [3] - Approximately 65% of annual revenue in 2024 came from the recurring maintenance and repair market, providing stability against economic fluctuations [4] - The company is expanding its sales center footprint and enhancing private-label offerings, with a focus on technology-driven products [4][8] Market Dynamics - The second quarter saw steady business in pool maintenance products, particularly private-label chemicals, which experienced double-digit growth [5] - Discretionary sales, including new pool construction and upgrades, showed incremental improvement but remained below pre-pandemic levels [6] - Competitive dynamics intensified, leading to pricing pressure in certain regions as competitors sought market share [6] Cash Flow and Shareholder Returns - Cash flow from operations for the first half of 2025 fell to $170.6 million, down from $172.1 million in the same period last year, influenced by a deferred tax payment and inventory build [10] - The company prioritized shareholder returns, repurchasing $156.4 million in shares and paying $92.2 million in dividends during the first half of 2025 [10][11] - The quarterly dividend was raised by 4% to $1.25 per share, supported by disciplined capital management [11] Future Outlook - Management updated its annual diluted EPS guidance to a range of $10.80 to $11.30, reflecting macroeconomic uncertainties impacting consumer confidence and interest rates [12] - The company noted a growing proportion of sales to larger, lower-margin customers, which could affect profitability [13]

Company Overview - Home Depot has grown from 340 locations in January 1995 to 2,350 locations as of May 4, 2025, including 182 in Canada and 140 in Mexico, making it a dominant player in the home improvement retail space [6][7] - The company reported $39.9 billion in sales in its fiscal Q1, significantly higher than 30 years ago, and generated $5.1 billion in operating income in its most recent fiscal quarter [7][8] Financial Performance - Home Depot returned $8.9 billion to shareholders in dividend payouts for fiscal 2024, alongside share repurchases [8] - The stock currently trades at a price-to-earnings ratio of 24.3, which is close to the S&P 500 average, but considered expensive given projected earnings per share growth of only 5.9% from fiscal 2024 to fiscal 2027 [12] Market Position and Future Outlook - Home Depot's strong brand presence, unmatched inventory assortment, and well-developed omnichannel capabilities position it well to maintain its industry leadership [9] - The median age of homes in the U.S. was 40 years in 2022, indicating a growing need for home maintenance and improvement, which supports demand for Home Depot's products [11] - Despite recent performance challenges due to macroeconomic factors, the home improvement industry is expected to remain durable, making it an attractive long-term investment [13]