Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

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Equity Bottom-Up

<ul><li>CULP posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, in what is perhaps best characterized as a persistent industry-wide demand-constrained environment.</li><li>Revenue was down in both segments (CHF down 4.6% Y/Y and CUF down 22.3%, which included some out of the ordinary inventory adjustments by one major customer) as consumer discretionary spending remains constrained given economic uncertainty, high interest rates, a slow housing market, and, increasingly, consumer wariness over the impact of the new administration’s tariffs and economic policies on the economy.</li><li>However, the macro headwinds somewhat obscure the significant sequential improvement in CHF gross margin over the past several quarters (from -1.2% in 1Q25 to +9.6% in 3Q25). </li></ul>

CULP posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, in what is perhaps best characterized as a persistent industry-wide demand-constrained environment.Revenue was down in both segments (CHF down 4.6% Y/Y and CUF down 22.3%, which included some out of the ordinary inventory adjustments by one major customer) as consumer discretionary spending remains constrained given economic uncertainty, high interest rates, a slow housing market, and, increasingly, consumer wariness over the impact of the new administration’s tariffs and economic policies on the economy.However, the macro headwinds somewhat obscure the significant sequential improvement in CHF gross margin over the past several quarters (from -1.2% in 1Q25 to +9.6% in 3Q25). 

Culp, Inc. - New Estimates Reflect Cost Savings...

Culp Inc

Culp, Inc. - New Estimates Reflect Cost Savings...