Trump administration plans further tax reforms including making 2017 cuts permanent, benefiting select companies

From Nasdaq: 2024-12-02 11:59:00

The Trump administration plans to push for more tax reforms, including making the 2017 tax cuts permanent and lowering rates. Green-energy tax breaks from the 2022 Inflation Reduction Act may be eliminated. Jeffries believes smaller cap companies in financial, industrial, consumer, and basic materials sectors will benefit the most. Seven companies could see gains from tax reports.

Wingstop Inc. (NASDAQ: WING) reported a 20.9% YoY growth in domestic comparable sales for Q3 2024. A 500 bps reduction in its tax rate could lead to a 6%-7% increase in EPS. Wingstop offers domestic and international franchises, with domestic operations poised to benefit the most.

Post Holdings Inc. (NYSE: POST) generates 80-90% of its revenues domestically. Tax policy changes could impact Post’s rate by 400-450 bps, possibly increasing free cash flow by around 4% over the next three years compared to current estimates.

Valvoline Inc. (NYSE: VVV) has one of the highest tax rates at 25.5% in 2024. A 500 bps corporate tax reduction could boost its adjusted EPS by 6%. This reduction would lower its tax rate to 20%, benefiting from lower corporate taxes.

BJ’s Wholesale Club Holdings Inc. (NYSE: BJ) could see a 7% increase in full-year 2025 EPS estimates with a 500 bps tax cut. This could add $40 million of net income, providing BJ’s with more flexibility for growth initiatives or returning value to shareholders.

Hilton Worldwide Holdings Inc. (NYSE: HLT) may see a $27 million increase for every 100 bps tax rate reduction in its 2025 adjusted FCF. A 500 bps tax cut could result in a $134 million bump in adjusted 2025 FCF, potentially adding $8 per share to the full-year 2025 EPS.

Best Buy Inc. (NYSE: BBY) could benefit from a 500 bps corporate tax rate drop, potentially seeing a 6% increase in net income and EPS based on 2025 street estimates. This could generate $93 million in cash for share buybacks and store updates.

BellRing Brands Inc. (NYSE: BRBR) could see a 6%-7% increase in near-term EPS with a 500 bps tax rate cut from 24.5% to 19.5%. This could allow for deeper reinvestment plans in marketing and innovation.



Read more at Nasdaq:: Trump Tax Reforms: 7 Stocks That Could Benefit in 2025