NL EPS Part Two: NXST, SONY, DIS, HD, and WMT

Nexstar (NXST): NXST posted a mixed quarter that keeps the 2026 election tailwind in play while 2025 still looks softer. Revenue was on target, but earnings fell short as political dollars fell, equity income from Food Network eased, and a one-time distribution claim hit margins. Ads were down on the tough political comparison while core advertising was basically steady. Management said non-political advertising is tracking down low single-digits for the fourth quarter with political similar to late 2021. Cash needs are higher this quarter with capex, software, interest, taxes, and higher programming payments, which tempers near-term free cash flow. The CW is narrowing losses and still points to breakeven in 2026. NewsNation continues to show the strongest year-over-year growth in basic cable, which helps the longer view. The Tegna deal is on track to close in the back half of 2026 amid a friendly regulatory environment. From here we are watching upcoming renewals with the TV networks and TV distributors, NewsNation momentum, CW profitability, and the pace of cord cutting. Reopening of the federal government could provide a near-term boost for the shares since the FCC will again begin working on approval for NXST’s highly accretive acquisition of Tegna. We will continue to hold NXST through the regulatory process and into the election cycle with a price target in the mid-$200s, with upside if the deal clears cleanly and core ads firm, and downside if the review drags or pay TV losses accelerate.

Sony (SONY): Sony delivered a clear beat and raise and shifted the focus to durable content and sensors while gaming executes through the holidays. Management lifted full-year guidance, cut the expected tariff hit across segments, and said it will operate the back half cautiously given the uncertain environment. Music leads near-term growth on steady streaming and a lift from Demon Slayer. Imaging & Sensing is improving as larger mobile sensors and tighter costs drive better profits, with another sales guidance increase already under review by Sony if momentum holds. Gaming looks healthy on engagement, with 119 million monthly active accounts and a higher mix of premium tiers, though Bungie remains a drag. The plan is to grow the PS5 base over the holidays without sacrificing profit. Hardware-adjacent electronics remain tougher in the U.S. and China due to tariffs, but Sony is managing inventory and costs and kept the segment’s outlook steady. With the Financial Services spin completed on October 1, management authorized a buyback of up to 100 billion yen through May 2026. Overall, the mix is improving, the tariff overhang is smaller, and holiday gaming plus sensor demand are the key drivers into 2026. We remain positive and expect SONY to push into the $30’s, reflecting a cleaner setup post-spin, quantified tariff risk, durable momentum in Music and Imaging, and a new buyback that supports the downside.

Disney (DIS): Disney delivered a mixed quarter that reset the near-term sentiment yet kept the long-term path intact. Parks worries resurfaced as domestic attendance softened late in the quarter and early holiday bookings slowed, though they still rose about 3%. Cruises remained very strong. Investors were disappointed by DIS framing 2026 expectations as weighted toward the back half of the year. Guidance is still on track for double-digit EPS growth, including segment expectations for high single-digit growth in Experiences, low single-digit growth in Sports, double-digit growth in Entertainment, and a 10% streaming margin target, with higher investment for new ships and about $24B of content spend. The ESPN DTC launch is working, with strong sign-ups and roughly 80% choosing the Trio bundle, which lowers churn. Disney Plus added subscribers and healthier ad pricing supports the idea that streaming progress is underappreciated. The selloff after earnings looks more about timing than trajectory as first-half results carry costs for new cruise launches, sports rights, and film slate timing, while the YouTube TV dispute adds noise. Streaming and experiences still drive profitable growth with clear cash returns. We expect DIS to climb back toward $130 with improving streaming margins, resilient park and cruise demand, and traction for ESPN’s DTC offering.

Home Depot (HD): HD reported a mixed third quarter and lowered guidance for the fourth quarter 2025. Revenue topped expectations and comps were slightly positive, but traffic fell and the lift came from customers spending more on each visit. Management pointed to lack of storms that drive repair and remodel, continued low housing turnover, and lack of lower interest rates to unlock big project pent up demand. The second-half tailwinds management (and Northlake) hoped for have not arrived. Monthly trends weakened into October, exacerbated by the lack of storm-driven demand. Near-term results will lean more on the macro improvement than we thought, at least for the next couple of quarters. Long-term strategy remains intact. We still like the long-term Pro focus even if recent acquisitions modestly pressure margins. The increased emphasis on ecommerce and fulfillment, which deepen relationships, should convert to continued market share gains, even if distribution mix. In the near-term, management expects big-ticket DIY to stay cautious, while everyday categories and digital grow. Put it all together, and the outlook now points to more modest comp growth and lower EPS until lower rates improve housing turnover and spending on larger projects. Despite the stock’s significant pullback, we do not believe the long-term story has weakened. We see strong operations, scale, and the Pro platform as reasons to wait for the turn and stay positioned for long-term market share gains, improved earnings growth, and a big recovery in the stock

Walmart (WMT): Walmart delivered another strong quarter with mid-single-digit sales growth and operating profit growing a bit faster. This is the financial algorithm management has been promising, and investors have been rewarding. With results a little ahead of consensus expectations, management raised full-year guidance. E-commerce accelerated, advertising grew quickly, and membership income from Walmart+ and Sam’s Club increased as more shoppers joined the ecosystem. These higher margin areas are growing north of 20% and driving operating margins higher. WMT keeps taking share across income tiers, including higher-income households. Leadership is pursuing a tech-powered model with more automation in distribution, faster delivery from local stores, and new AI features in the app. WMT is underscoring this shift with a move to the tech-heavy Nasdaq index and a planned CEO handoff. The move to the NASDAQ should provide a one-time boost for the stock. The main risk is still the strained core customer, which keeps discretionary categories uneven and makes the valuation harder to stretch in the near term, especially with the shares trading at an all-time high P-E above 30. Big picture, Walmart remains a steady compounder as fast-growing alternative, non-store revenue streams layer onto a dominant grocery base. Operating discipline should let profit growth outpace sales over time even if near-term upside is modest. This profile is being rewarded by investors with other leading retailers achieving similar fundamental dynamics also trading at elevated valuations. Northlake is happy to hold WMT as long as fundamentals are stable to improving.

NXST, SONY, DIS, HD, and WMT are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts. Steve is the sole proprietor of Northlake, a registered investment advisor. Northlake’s regulatory filings can be found at www.sec.gov.