This week, we’re digging into three sectors where the headlines missed the real story. 

A margin rebound got buried under soft guidance, tariff drama overshadowed a strong operating base, and a one-time charge disguised an otherwise solid quarter. 

These aren’t high-growth breakouts; they’re disciplined operators with improving fundamentals and rerate potential hiding in plain sight.

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Consumer Staples

Clorox (NYSE: CLX) came out swinging in Q2 with a 28% earnings beat and operating margins that jumped 670 basis points year-over-year. You’d think that’d be enough to change the narrative. It wasn’t.

Despite posting $2.87 per share in adjusted earnings and 8% organic sales growth, shares barely moved. Management’s forward guidance landed flat – $6.13 at the midpoint, a notch below consensus – and that cautious tone was enough to keep fresh money on the sidelines.

Here’s what the market is missing: the damage from last year’s supply chain overhaul has already played out. Gross margins are back above 40%. Promotional spend is trending down. And pricing power, especially in cleaning and household, hasn’t cracked yet.

Yes, the top line is soft. But when a stock trades at 20x forward earnings with a recovering cost base and a 3.4% yield, you don’t need heroic growth to make it work. You need operating leverage, and Clorox is finally showing signs it’s back.

If that trend holds into Q3, this could shift fast. The setup is defensive, cash-rich, and under-owned. Don’t be surprised if the re-rating arrives before the earnings inflect.

Retail

Ross Stores (NASDAQ: ROST) dipped last week after soft guidance and tariff noise put pressure on the whole off-price cohort. EPS came in at $1.42, in line, but management struck a cautious tone on full-year margins. The stock sold off ~1.4% on decent volume.

But under the hood, the business is holding up. Same-store sales grew. Inventory turns stayed clean. And with nearly $2 billion in cash on the balance sheet, Ross is still built for flexibility.

This isn’t a growth story; it’s a margin discipline story. And in that respect, nothing’s broken. The market's reacting to macro risk, not a shift in fundamentals.

Tariffs might squeeze imports, but off-price thrives on supply disruption. Management didn’t guide down because of demand softness; they’re buying optionality while the election and rate backdrop shake out.

For long-only value desks, this is a familiar setup: flat guidance, short-term noise, and a business model that compounds in sideways markets. Ross is off the highs, but not out of play. If volatility spikes, off-price is usually where capital hides.

Healthcare

Becton Dickinson (NYSE: BDX) slipped 3.7% this week after announcing a $230 million charge tied to an infusion system recall. The news hit fast, but the drop masked a quarter that came in stronger than expected.

Revenue rose 5.4% organically to $5.1 billion. EPS reached $3.15, beating consensus by $0.11. Gross margins moved up 80 basis points. Management raised the low end of full-year earnings guidance, signaling confidence in the second half.

The recall was already in motion before this quarter. Shipments had paused, and the risk was telegraphed. What changed was the accounting. The charge showed up, and the optics dominated the narrative. Operationally, core segments held steady, with strength in surgical instruments and diagnostics.

Becton Dickinson doesn’t run hot. It moves with slow, consistent capital returns and trades at about 15x forward earnings. That multiple sits near the bottom of its five-year range. Cash flow is solid, and payout ratios remain conservative.

The stock sold off on a one-time adjustment. The core business didn’t break. If capital rotates back into low-volatility healthcare names, BDX could recover quietly and quickly.

Primo Brands (NASDAQ: PRMB) is setting up for a potentially explosive Q2, with Wall Street calling for a 65% jump in earnings and a 271% surge in revenue. 

That alone is enough to catch attention. But the real setup is in expectations; analyst estimates have crept higher into the print, yet sentiment has turned cautious, with a negative earnings surprise score hinting at nerves.

The last quarter brought a 20% EPS beat, and Primo’s three-for-four track record on surprises keeps the upside scenario alive. The name’s still a black box to most investors, but the August 7 report could reset that narrative fast. 

If the numbers land even slightly above the bar, this becomes a rerating candidate in real time. 

CVS Health (NYSE: CVS) is finally getting credit for the transformation it's been pushing since 2023. Q2 results showed 8.4% top-line growth, and management raised full-year EPS guidance to $6.30–$6.40. The market noticed – shares jumped 7% premarket and held the gains.

CVS still trades at under 10x earnings, with a retail-health flywheel starting to hum. Oak Street’s at-risk patient count is surging, Signify’s hitting record in-home visits, and core pharmacy sales are up. 

GAAP earnings fell, and Medicare pressure still looms, but the growth engines are real and scaling. This isn’t the sleepy drugstore chain anymore. The next phase of this rerate may already be underway.

Viasat (NASDAQ: VSAT) just got a shot of adrenaline from activist firm Carronade Capital, which wants the company to break itself up. 

The target: a spinout of the defense business that Carronade claims could unlock $11 billion in value and drive a 500% upside.

Management confirmed a strategic review is already in motion, and the investor letter drops just ahead of earnings. Carronade is building its stake, has met with execs, and clearly isn’t here to make friends. 

This is the kind of external pressure that gets boards moving, and fast. For a stock still trading like a muddled satcom play, the upside from a cleaner story is real. Keep a close eye on how this unfolds this week.

Add in a few special situations and contrarian rebounds, and this week’s board is more than just noise. If earnings come in clean, rotation could follow quickly and without warning.

That's our coverage for today; thanks for reading! Reply to this email with feedback or any value names you'd like us to dig into.

Best Regards,
—Noah Zelvis
Undervalued Edge