ISS EVA Research Roundup: August 14th, 2025

Weekly Research

Names in the News: WBD and MNST (report)

This week, we cover two large cap U.S. names that recently reported a strong quarter and have been upgraded in the PRVit framework, Warner Bros. Discovery, Inc. (WBD) and Monster Beverage Corporation (MNST). WBD’s stock price rose more than 7% on Wednesday as the market digested a strong quarterly performance and the news of the company’s recently announced split into Warner Bros. and Discovery Global, expected mid-2026. MNST’s stock price rose by 8% last Thursday after reporting record quarterly net sales, resulting in a positive EVA Momentum inflection after five sequential quarters of deterioration.

Fed Rate Cuts Provide a Buffer? (report)

The CME FedWatch Tool recently put the probability of a 25bps rate cut at the next FED meeting (September 17, 2025) at 94.4%. During recent research meetings with our team, we hypothesized that as the Fed cuts rates, the reduction in the Risk-Free Rate and the subsequent reduction in the Cost of Capital may help bolster EVA Margin even if some of the EVA Drivers deteriorate.

Global Industrials: Mid-Year Review (report)

At the start of the year, we had commented on the ‘cycle’ improving for the global Industrials sector, with EVA Momentum (growth) on an improving trend ex U.S. and close to bottoming in the U.S. We have seen a continuation of the trend so far in 2025. This was consistent with the outlook implied by consensus and the OECD Leading Indicators at the beginning of the year.

Global Metals & Mining: Gold Producers Strike the EVA Gold! (report)

We maintain a positive outlook for the industry given favorable Valuations. EVA Margin has shown signs of bottoming out, while EVA Momentum has continued to trend higher over the last two years. We run two screens to search for attractive PRVit-rated names in the DM and EM regions. We screen for names with positive EVA Shock over 1Q and 1Yr and filter out names in the top two quintiles of Valuation. We also look for deep value opportunities within the industry.

Industry Snapshot: Global Household Products (report)

On average, Large Cap firms demonstrate strong levels of Risk-Adjusted Profitability and expensive Valuation. EVA Fundamentals for the industry have worsened in the last quarter; however, consensus expects a recovery. EVA Drivers present mixed signals as EBITDAR Margin has plateaued, top-line growth has improved (but remains negative), and asset efficiency has deteriorated. Investor expectations for incremental growth are around the upper limit of their long-term range.

Quant Report

PRVit Factor Report: Emerging Markets (report)

Cheap Value posted its third positive spread month in the Large Cap universe. Cheap Value has been positive for three of the last four months in Small Cap. Quality posted a negative spread as investors added to Risk positions and ignored Profitability. July was the third month in a row that investors added to Risk positions in Large Cap. Vulnerability Risk (R2) was positive in Small Cap as investors favored companies with lower leverage and better cash flows.

Quant Corner: August 14, 2025 (report)

PRVit spreads were positive in the U.S. and Japan through the first two weeks of August. Quality continued to struggle everywhere except Japan. Cheap Value outperformed expensive Value in all regions except AxJ and the Emerging Markets as the Value trade continues.

Chart of the Week: EVA Fundamentals & FED Fund Rate

With expectations high for further FED rate cuts we wanted to look at the impact to the level and trend in economic profitability during interest rate hiking and cutting cycles. In the chart above we overlay the FED Funds Rate with the U.S. aggregate EVA Fundamentals. We note that aggregate EVA Margin and the FED Funds Rate have tended to move in parallel historically. Will Economic Profitability follow the same pattern and continue to trend down? See this week’s Fed Rate Cuts Provide a Buffer? report for more on this.

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Originally Posted on August 14, 2025