The returning Trump administration will seek more tax reforms pending approval from Congress. They plan on making the 2017 Trump tax cuts permanent and even lower some rates. The corporate tax rate will be dropped to 15% while the child tax credit is hiked. Many of the green-energy tax breaks from the 2022 Inflation Reduction Act are expected to be terminated. Jeffries believes smaller cap companies in the financial,sectors are set to benefit the most.
According to Jeffries analyst Bret Jordan, a 500 bps corporate tax reduction would lower its tax rate to 20%, which would go right into its bottom line, boosting its adjusted EPS by 6%.According to Jeffries discount retailer analyst Corey Tarlowe, this would equate to an extra $40 million of net income or 7% added to the bottom line.
A 500 BPS tax cut would equate to a $134 million bump in its adjusted 2025 FCF, dropping its corporate tax rate to 25.7%. This could generate $93 million in cash, which Jeffries hardline analyst Johnathan Matuszewski believes the company will use to buy back more shares and update interior store displays.would deepen near-term reinvestment plans for marketing and innovation with a 500 bps tax rate cut.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.
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