There is a corner of the grocery aisle that Wall Street has spent two years actively avoiding, and one of its biggest names reports Tuesday morning before the open.

Expectations going in are about as low as they get without the company actually being in trouble. Read on, and you will see why the bar being this low changes what counts as good news.

Retail

Bath & Body Works Inc. (NYSE: BBWI) has a fresh catalyst after activist investor Barington Capital pushed the company to consider a sale, larger share repurchases, and board changes. The pressure comes after a steep decline left the retailer valued at roughly $3.5 billion.

Management now expects adjusted 2026 EPS of $2.60 to $2.80 and roughly $650 million of free cash flow. Around the current share price, BBWI trades near 6.5 times guided earnings while its expected free cash flow equals almost 18% of the company’s equity value.

The operating story is not completely broken either. Q2 sales fell 2.3%, but operating income improved, direct sales grew for the first time since 2021, and international and other revenue increased nearly 25%.

The Cash Flow Gives Activists Something to Work With

Bath & Body Works has also retired more than $500 million of debt, giving management greater flexibility around capital allocation. If free cash flow holds near current guidance, your upside does not depend entirely on a buyer appearing, because heavier repurchases at roughly 6 times earnings could materially increase per-share value.

The Cheap Multiple Reflects Real Problems

Sales are still declining, consumer spending remains uncertain, and the turnaround is far from complete. Still, you rarely find a recognizable brand generating roughly $650 million of annual free cash flow against a $3.5 billion valuation, especially with an activist now pushing management to unlock that discount.

Industrials

Herc Holdings Inc. (NYSE: HRI) received a fresh boost after JPMorgan upgraded the stock to Overweight, arguing that its valuation discount to larger rival United Rentals has widened beyond historical norms. The call comes as Herc moves deeper into integrating H&E Equipment Services.

Management now expects $2.05 billion to $2.125 billion of adjusted EBITDA for 2026. Against current enterprise value, Herc trades around 6.5 to 7 times guided EBITDA, a sizable discount to the multiple the sector leader commands.

Operating momentum is also improving. Q2 equipment rental revenue rose 23%, adjusted EBITDA increased 19%, and first-half free cash flow nearly doubled to $202 million, giving you evidence that the acquisition is beginning to contribute rather than simply adding scale.

The Synergy Story Still Has Room

Herc expects another $100 million to $120 million of revenue synergies and roughly $90 million of incremental cost savings as integration progresses. If those benefits arrive while utilization improves, your return potential could come from both higher EBITDA and a narrowing peer discount, without requiring a dramatic recovery in construction activity.

Debt Is the Price of the Discount

The H&E acquisition left Herc with roughly $7.9 billion of net debt and leverage near 4 times adjusted EBITDA, so the balance sheet remains the biggest risk. Still, you do not need Herc to match United Rentals’ valuation for the setup to work, only continued integration progress, cash generation, and gradual deleveraging from today’s discounted starting point.

Banking

Old National Bancorp (NASDAQ: ONB) picked up fresh support after JPMorgan initiated coverage with an Overweight rating and a $32 price target. The call comes after a quarter in which the regional bank delivered record earnings while continuing to integrate its recent acquisitions.

Adjusted Q2 EPS reached $0.65, while return on tangible common equity climbed to 19.8% and return on assets reached 1.38%. Despite those returns, Old National is valued at roughly 11 times earnings, leaving a sizable gap between profitability and the multiple investors are assigning it.

Efficiency is improving too, with the adjusted efficiency ratio falling to 47%. Book value increased to $21.80 per share, and management has repurchased roughly $123.5 million of stock while maintaining a commercial loan pipeline near $5.6 billion.

The Acquisitions Are Starting to Earn Their Keep

Old National expanded aggressively through deals, including Bremer, and investors have had good reason to wait for proof that the added scale would improve returns. With tangible returns now approaching 20%, continued cost savings and buybacks give your investment more than one route toward stronger per-share earnings.

Credit Risk Still Sets the Ceiling

Regional banks remain exposed to commercial real estate, deposit competition, rate changes, and integration risk, while net charge-offs are not zero. Still, you are paying about 11 times earnings for a bank producing unusually strong tangible returns, improving efficiency, and reducing its share count, leaving room for a higher valuation if those results prove durable.

General Mills (NYSE: GIS)

Sentiment on packaged food is about as bad as it gets without the business actually being broken, and this one reports fiscal Q1 before Tuesday’s open. The bar is genuinely on the floor. Nobody is asking for a great quarter here; they are asking for volume declines to stop getting worse, which is a far easier thing to deliver. 

Pair any hint of stabilization with a trailing dividend yield near 6.8% and underweight funds suddenly have a problem, because being short a stabilizing business paying you that much is uncomfortable. Hold through the print if you own it. A modest starter position ahead of Tuesday makes sense if you do not.

BioMarin Pharmaceutical (NASDAQ: BMRN)

This trades meaningfully below the intrinsic value estimates, and the reason is not a mystery. Roctavian, the hemophilia gene therapy, was a commercial disappointment. It took the multiple down and then kept it there. That reset is now fully baked into estimates, which is the part worth noticing. 

Underneath it, Voxzogo for achondroplasia keeps expanding its label globally, and there are multiple pipeline readouts landing through year-end. You are paying a below-market multiple for a rare disease franchise with genuine gene therapy optionality attached. Insiders have been net sellers over the past year, so size this at half a position and add on weakness.

The Mosaic Company (NYSE: MOS)

Two things the market keeps getting wrong are colliding here. Fertilizer prices look to have bottomed, with potash and phosphate contract pricing firming through the summer, and the food security policy backdrop keeps getting more supportive rather than less. 

Management has been buying back stock at a pace that tells you they see the same setup. The balance sheet is in the best condition it has been in years, which matters in a cyclical business where the last downturn usually decides who survives the next one. 

You collect a dividend while you wait. Q3 earnings in early November is the catalyst, but positioning matters more than timing here.

That's our coverage for today; thanks for reading! Reply to this email with feedback or any stocks you want me to check out.

Best Regards,
—Noah Zelvis
Undervalued Edge