September 1st - The Week Ahead

The Week Ahead Of Us 🔍

Welcome back!

Stocks fell on Friday after Core PCE accelerated to 2.9% in July and Investors may have wanted to take some chips off the table. High-ish inflation data doesn’t help the Fed though, which remains in between a rock and a hard place as it relates to 1) a weakening labor market and 2) persistent inflation & tariff-related inflation risk. We reiterate though, that the AI spending super cycle is the more helpful barometer (Nvidia bookings were a bit of a disappointment to the Street but still quite robust) but Friday’s appeals court ruling regarding most of the Trump tariffs being illegal is an important catalyst over the next 45 days. More on that in a bit, futures are little changed at the moment.

Despite the AI boom & upcoming rate cut, there’s still room for a breather in this expensive market - with the WSJ reporting this weekend that the S&P 500 price-to-sales ratio is now at record highs of 3.23x.

Also - we’ve updated our referral program to reward readers with free access to the WSR Investing Club upon reaching referral milestones. More on that below.

Here’s a look at earnings this week.

• Monday: KT Corporation

• Tuesday: Zscaler, NIO, Signet Jewelers Limited, Academy Sports, HealthEquity

• Wednesday: Salesforce, Hewlett Packard Enterprise Company, Dollar Tree, Campbell Soup, Macy’s, American Eagle Outfitters, GitLab, Credo Technology

• Thursday: Broadcom, lululemon, DocuSign, Ares Acquisition Corporation, Lifevantage

• Friday: The Children’s Place

Here’s a look at economic data this week (estimates are in quotations).

• Monday: Labor Day holiday

• Tuesday: ISM manufacturing (48.0%), Construction spending July (0.4%), S&P final U.S. manufacturing PMI Aug.

• Wednesday: St. Louis Fed President Alberto Musalem speaks, Job openings July (7.4M), Factory orders July (-4.8%), Minneapolis Fed President Neel Kashkari speaks, Fed Beige Book, Auto sales Aug.

• Thursday: ADP employment Aug. (104,000), Initial jobless claims Aug. 30, U.S. productivity revision Q2 (2.4%), U.S. trade deficit July (-$60.2B), S&P final U.S. services PMI Aug., ISM services Aug. (50.1%), New York Fed President John Williams speaks, Chicago Fed President Austan Goolsbee speaks

• Friday: U.S. employment report Aug. (73,000), U.S. unemployment rate Aug. (4.2%), U.S. hourly wages Aug. (0.3%), Hourly wages year over year (3.9%)

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Earnings Corner 📈 📉

Nvidia $NVDA ( ▼ 2.58% )  Beat with revenue at $46.7B and EPS ahead of estimates. Data Center revenue climbed more than 50% y/y but landed just shy of consensus as no H20 chips shipped to China, though $180M of that inventory was redirected to other customers. Blackwell demand continued to ramp, gaming surged nearly 50% y/y, and robotics also gained momentum. Margins held above 70% while the board authorized a massive new buyback. Looking ahead, management guided next quarter revenue above street estimates with margins steady, but the modest decel in growth spooked some investors and led to the chip giant trading off slightly.

Dell $DELL ( ▼ 0.97% ) Revenue and EPS beat. Infrastructure Solutions (servers/AI) hit $16.8B, ahead of estimates on strong AI demand, while Client Solutions missed at $12.5B. Management lifted its full-year AI server shipment outlook to $20B from $15B, though consumer PCs remain a drag. Q3 EPS guidance came in below street estimates and tariffs remain a potential headwind for hardware costs and PC demand.

Crowdstrike $CRWD ( ▼ 2.46% )  Beat with revenue at $1.17B and EPS at $0.93, both ahead of estimates. Subscription revenue grew 21% with record net new ARR of $221M, though operating margin slipped and outage related credits continue to weigh on growth. Management lifted full year EPS guidance, but revenue outlook for next quarter came in just shy of Street and shares sold off on the softer top-line view.

Snowflake $SNOW ( ▼ 2.43% ) Beat with revenue at $1.1B and EPS at $0.35, both ahead of estimates. Product revenue rose 32% y/y on AI-driven data modernization, with net revenue retention reaccelerating to 125% after years of declines. Analysts called it Snowflake’s strongest beat in years, and October-quarter product revenue guidance came in above consensus, reinforcing momentum.

WIlliams-Sonoma $WSM ( ▲ 1.27% ) Beat with revenue and EPS, as expected as comps rose 3.7% above forecasts. Growth was broad-based across Pottery Barn, West Elm, and newer brands like Rejuvenation, with B2B and e-commerce contributing strongly. Despite its tariff rate doubling since May, the company kept its margin guide intact, offsetting pressure with stronger sales, inventory pull-forward, price hikes, and sourcing shifts. Full-year revenue growth outlook was raised, though tariff risks remain an overhang.

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Today’s Headlines 🍿 

• Trump tariffs are going to the Supreme Court: A federal appeals court ruled “most” of Trump’s tariffs were ruled illegal and could be repealed in ~45 days. The appellate court’s ruling would take effect on Oct. 14, so the Trump administration has limited time to ask the Supreme Court to reverse the decision

  • Meanwhile, trade progress with India sounds close: Trump may lower tariffs on India (currently as high as 50%) following India’s offer to lower tariff rates on U.S. goods to 0%

• Meta’s $14.3B bet on Scale AI might be a flop: Cracks are emerging in the high-profile deal that saw Scale AI provide training infrastructure for Meta’s frontier models. Disputes over costs, data access, and control of IP have surfaced, raising questions about whether this was a wasteful overpay. Meta has reportedly been using Mercor and Surge for training instead of Scale AI, and is even weighing using Gemini in its apps

• National Housing Emergency: U.S. Treasury Secretary Bessent is turning his attention towards the high cost of housing - noting Trump may declare a “national housing emergency” in the fall to try to reduce housing costs and improve overall housing affordability

• Spirit goes bankrupt (again) - The airline has filed Chapter 11 for the 2nd time this year, the first of many steps to ensure the budget airline’s survival. Spirit now says it will reduce its network and shrink its fleet, moves that should reduce costs by “hundreds of millions of dollars” a year

• How Milan is becoming an expat haven: Italy’s favorable tax code has made the country’s most modern city a popular destination for wealthy finance professionals. More firms are opening offices in Milan, and lower taxes - including a flat rate on carried interest - makes the city especially attractive for those looking to leave the U.S. and UK

  • As for the UK, bond yields are continuing to widen, as investors are losing confidence in the country’s fiscal situation

• Ownership disputes in San Diego: A legal battle for control of the Padres has spilled over into private equity after the death of owner Peter Seidler in 2023. The PE firm Seidler founded is now run by his brother Bob, but his widow Sheel has control of the trust - and she wants to sell

• Coffee prices are set to rise: JM Smucker, owner of Folgers and Cafe Bustelo, announced that a price hike is likely coming this winter to keep up with increased tariffs. Producers lack a plethora of options for avoiding higher prices, for high-quality beans are only grown in a select few countries - Brazil is the world leader, and their beans are tariffed at 50% by the U.S.

• Grant Thornton has laid off almost all of its UK-based secretaries, a move to cut costs after the accounting firm sold a majority stake to PE group Cinven

• Cracker Barrel has swapped back its logo: Uncle Herchel is back after leaders acknowledged the conservative backlash and scrapped the logo change. The stock returned to old-logo levels following the news

• NextEra bets on nuclear for AI: NextEra is planning to repower the shuttered Duane Arnold nuclear plant in Iowa to supply energy-hungry data centers running AI workloads. The project would tie together nuclear generation and hyperscale tech demand, part of a broader scramble for stable clean power

• Crescent Capital is pitching a $3B credit continuation fund that will allow it to move some assets from its $4.6B 2017 vintage into a new fund

• Apple is getting into Radio: The company announced a deal with radio platform TuneIn that will bring its curated radio stations to users outside of the Apple Music app. The goal is to convert these new radio listeners into Apple Music subscribers, providing a boost to the service that has been losing share to Spotify in recent years

• Alibaba is testing a new AI chip: China’s biggest cloud computing company has developed a more versatile chip, a move to fill the void left after Nvidia hit regulatory barriers - although industry experts say American chips remain far superior

• Private credit couple under pressure: A husband-and-wife duo behind bridging Finance is facing a bankruptcy push from creditors in Canada. The case highlights the growing risks in the lightly regulated sector as rates stay high and stress spreads to niche lenders

• McAfee redeems preferreds: The cybersecurity firm is using cash on hand to redeem a slug of preferred shares. The move simplifies its capital structure and signals stronger liquidity management ahead of a possible refinancing push

• Sara Lee frozen bakery up for sale: Kohlberg is preparing to launch a sale process for Sara Lee Frozen Bakery, hoping to capitalize on renewed sponsor appetite for consumer staples. The brand, carved out of Tyson Foods, could draw interest from both strategics and mid-market sponsors

• Blue Owl leads Kroll refinancing: Blue Owl is spearheading a refinancing deal for Kroll, a debt-laden risk and advisory firm. The transaction underscores how private credit is stepping in to refinance sponsor-backed companies locked out of syndicated markets

M&A Transactions💭 

PepsiCo (NAS: PEP) boosts stake its in Celsius Holdings (NAS: CELH) with $585.0M deal.

Vital Energy (NYS: VTLE), an independent energy company, has reached a definitive agreement to be acquired for $5.494B by Crescent Energy (NYS: CRGY). EV/EBITDA was 13.28x and EV/Revenue was 2.84x. Houlihan Lokey, J.P. Morgan, Lazard, and Intrepid Financial Partners advised on the sale.

Verint Systems (NAS: VRNT), helps brands provide boundless customer experience automation, was acquired for $1.67B by Calabrio. EV/EBITDA was 12.68x and EV/Revenue was 1.87x. Jefferies advised on the sale.

ScPharmaceuticals (NAS: SCPH), a pharmaceutical company, has reached a definitive agreement to be acquired for $337.551M by MannKind (NAS: MNKD). EV/Revenue was 6.76x. Leerink Partners advised on the sale.

Quipt Home Medical (TSE: QIPT), provides in-home monitoring equipment, has reached a definitive agreement to be acquired for $215.87M by Forager Capital Management. EV/EBITDA was 4.59x and EV/Revenue was 0.91x.

OrganOx, developer and manufacturer of organ preservation and transplantation devices, has reached a definitive agreement to be acquired for $1.5B by Terumo (TKS: 4543). Perella Weinberg Partners and Piper Sandler advised on the sale.

Endesa (MAD: ELE) has reached a definitive agreement to acquire The Electricity Retail Operation of Masorange for EUR 150.0M.

JDE Peet’s, world’s largest pure-play coffee and tea group, has reached a definitive agreement to be acquired for EUR 15.7B by Keurig Dr Pepper (NAS: KDP). EV/EBITDA was 12.6x and EV/Revenue was 1.74x. Bank of America advised on the sale.

GS Inima Environment, provider of water desalination and purification services, has reached a definitive agreement to be acquired for $1.2B by Abu Dhabi National Energy Company (ADS: TAQA). Goldman Sachs advised on the sale.

A1rwater, developer of an air-to-water technology, has reached a definitive agreement to be acquired through a reverse merger for $419.0M by Inflection Point Acquisition III. The resulting combined entity will trade on the Nasdaq Stock Market under the ticker symbol WATR. Concurrently the company closed an additional $32.5M of a planned $63.5M of development capital from SG Ventures and Inflection Point Acquisition through a private placement.

Waltz Health, developer of consumer tools, was acquired for $6.0B by EVERSANA.

Pick Your Part, distributor of used car parts, has entered into a definitive agreement to be acquired for $410.0M by Pacific Avenue Capital Partners. Jefferies advised on the sale.

KabaFusion, provider of specialty pharmaceutical home infusion services, has entered into a definitive agreement to be acquired for $2.2B by Nautica Partners. Houlihan Lokey advised on the sale.

Intelliflo, developer of business management and cash flow planning software, has entered into a definitive agreement to be acquired for $200.0M by The Carlyle Group. Evercore Group advised on the sale.

The Global Consumer Business Unit of Fonterra Co-operative Group (NZE: FCG) was acquired by Groupe Lactalis for NZD 4.22B. Jarden Group and Craigs Investment Partners advised on the sale.

Dun & Bradstreet Holdings, a provider of business decisioning data and analytics, was acquired for $7.7B by Clearlake Capital Group. EV/EBITDA was 9.94x and EV/Revenue was 3.2x. Bank of America advised on the sale.

Brownline, provider of guidance systems, was acquired for EUR 129.0M by Halma (LON: HLMA). EV/Revenue was 4.37x.

Estacionamientos y Servicios, developer of on-street parking management software, was acquired for EUR 600.0M by Tikehau Capital.

Domain Holdings Australia (FRA: 3DH), a technology company, was acquired for AUD 2.65B by CoStar Group (NAS: CSGP). UBS Group advised on the sale.

ContiTech Techno-Chimie, manufacturer and producer of rubber products, has reached a definitive agreement to be acquired for EUR 1.9B by Regent.

Advent International has entered into a definitive agreement to acquire The Aerospace and Defense Business of Coherent for $400.0M. Moelis & Company advised on the sale.

Aspen Insurance Holdings (NYS: AHL), a Bermudian insurance and reinsurance company, has reached a definitive agreement to be acquired for $3.5B by Sompo Holdings (TKS: 8630). EV/EBIDTA was 8.16x and EV/Revenue was 1.11x. Insurance Advisory Partners and Goldman Sachs advised on the sale.

Walgreens Boots Alliance, one of the largest retail pharmacy chains in the US, was acquired for $39.75B by Sycamore Partners Management and Mr. Stefano Pessina. EV/Revenue was 0.26x. Centerview Partners and Morgan Stanley advised on the sale.

Synthesia Nitrocellulose, manufacturer of energetic nitrocellulose, has reached a definitive agreement to be acquired CZK 22.0B by Colt CZ Group (PAR: CZG).

Guardian Capital Group (TSE: GCG), a diversified financial services company, has reached a definitive agreement to be acquired for CAD 1.803B by Desjardins Global Asset Management. EV/EBIDTA was 9.12x and EV/Revenue was 4.59x. BMO Capital Markets advised on the sale.

Lafarge Africa (NSA: WAPCO), manufacturing and marketing of cement, was acquired for $1.0B by Huaxin Cement (SHG: 600801). EV/EBITDA was 5.7x and EV/Revenue was 2.07x.

Arclin entered into a definitive agreement to acquire The Two Business Division (Kevlar and Nomex Brands) of DuPont de Nemoursto for $1.8B. Centerview Partners and Goldman Sachs advised on the sale.

Comfort Click, wholesaler and retailer of healthcare products, was acquired for GBP 239.0M by Zydus Wellness (BOM: 531335). EV/Revenue was 1.85x.

Private Placement Transactions💭 

TikTok’s valuation is now $330B following a new share buyback.

Metropolitan Stock Exchange, operator of a stock exchange platform, raised INR 10.0B of venture funding from Straits Holdings, Butterworth Holdings, and Evolve Capital.

GLP, operator of data centers located across China, raised CNY 2.5B of venture funding from Quzhou Industrial Development.

 Cambridge Aerospace, a company operating in stealth mode, raised $100.0M of venture funding led by Spark Capital at a pre-money valuation of $300.0M.

BETA Technologies, operator of a range of electric aircraft, raised $469.62M of Series C venture funding led by Qatar Investment Authority at a pre-money valuation of $3.6B.

Aerospacelab, developer of small satellites, raised EUR 94M of Series B venture funding from undisclosed investors.

 Wugen, developer of off-the-shelf cell therapy technology, raised $115.0M of venture funding led by Fidelity Management & Research Company.

Wicresoft, provider of consulting and advisory operations, raised nearly $100.0M of venture funding led by Confitop Capital.

Framer, developer of interactive design software, raised $100.0M of Series D venture funding led by Atomico and Meritech Capital Partners at a pre-money valuation of $1.9B.

Fermi America, operator of energy-integrated AI infrastructure campuses, raised $100.0M of Series C venture funding led by Macquarie Group.

Updating our Referral Program ☕️ 

We’ve decided to upgrade our referral program to grant readers who refer 6 readers 3 months of free access to the Wall Street Rollup Investing Club. That’s $101.97 of value - for free.

Even better, if you refer 15 readers, you will earn 8 months of free access to the Wall Street Rollup Investing Club. That’s $271.92 of value - for free. 

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Until next time!

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