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Posted October 31, 2025 at 9:45 am
This week, we cover two U.S. Large Cap names that look very strong in the PRVit framework, Sysco Corporation (SYY) and General Dynamics Corporation (GD). SYY is a name that was upgraded in the PRVit framework yesterday. The firm registered an improvement in EVA Margin after eight quarters of deterioration. GD saw its stock price jump to an all-time high after the company announced strong numbers that translated to a further acceleration in EVA Momentum (growth).
We take a deep dive look at three firms which have seen a ratings upgrade over the past week: Swedish firm Trelleborg AB (TRELB SS); Lithia Motors, Inc. (LAD); and Deckers Outdoor Corporation (DECK).
At a time when Nvidia (NVDA) became the first company worth $5trn, we thought it was a good opportunity to understand the level of expectations in the market today looking at Future Growth Reliance (FGR) across the global Tech sector.
The U.S. Automobiles industry has seen pressured EVA Fundamentals through 2025, but Valuations for the industry aggregate have trend higher, reflecting investors’ improved outlook on the industry going forward.
The global Beverages industry may be closer to a bottoming in EVA Momentum (growth) after seeing pressured incremental EVA growth over the last two years. Consensus data suggests EVA Momentum will bottom out at the current levels and trend higher going forward. KO and PEP reported an acceleration in top-line growth during their Q3 earnings after seeing a protracted period of deceleration between Q1 2022 and Q2 2025.
As markets hit peaks, we look at potential safe havens for a rollover. Our screen is based on the factor performance we have seen in prior periods of peaks rolling over. We note that good Profitability (quintile 1 = +70bps), low Risk (quintile 1 = +90bps), and expensive Valuation (quintile 5 = +33bps) have generated the highest average alpha during these periods. Our screen includes companies across most sectors.
EVA Margin has shown signs of recovery in Q3 on account of Sales Growth remaining positive, a slight improvement in EBITDAR Margin, and a reduced drag from higher Productive Capital Charges relative to sales. Investors are very bullish on the outlook for incremental EVA creation going forward, with top-line growth turning positive and EVA Momentum becoming less negative in 2025 so far.
Through the final week of October, we see PRVit working in Europe, the U.K., Japan, and the Emerging Markets. Quality continued to struggle in all regions except Europe and the Emerging Markets. Cheap Value outperformed expensive Value in all regions except the U.S., the Emerging Markets, and the Global universe.
Next week we will publish our current thoughts on where we are positioned in the economic cycle and how that can help inform investment strategies. The macro stats show U.S. GDP growth stagnating in 2026, while EVA Momentum (growth in value creation) continues to expand for the aggregate U.S. market. Inflation is below the 10-year average (3.15%) although 2025 is expected to come in higher than 2024 and estimates for 2026 are lower than 2024. The strong performance of Cyclicals year-to-date would indicate we have been in the recovery phase, but Defensives have closed the gap over the last quarter.
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Originally Posted on October 30, 2025
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This material is from ISS EVA and is being posted with its permission. The views expressed in this material are solely those of the author and/or ISS EVA and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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