Jefferies analysts analyzed the potential effects of tax reform under a second Trump administration on public U.S.-based companies. This time, the benefit is likely to be smaller than Trump's 2018 tax reform, simply because the current maximum rate of 21% is a far lower and there's less clarity on where the new maximum rate will land.

"While we do not anticipate that further efforts on corporate tax reform will have a similar transformational impact that the ~14% cut enacted in '18 did, further relief may add a kicker for companies still paying full freight and especially down cap," the analysts wrote in a note to clients.

"From a headline perspective, smaller cap companies and those within the consumer, materials, financials & industrials sectors should mechanically see the largest benefit," they added.

And there are other factors beside the headline tax rate. For example, there will be an increased impact for domestically focused companies. In addition, the company's underlying trajectory and prospects play a role in how tax reform will affect it. And third, how proceeds are used — i.e., buybacks, deleveraging, M&A, or R&D — can produce dramatically different outcomes for shareholders.

All told, the expected tax reform cuts offer a "compelling 'reason number four' " to consider on each idea, Jefferies said.

The Jefferies analysts' picks are:

• Wingstop (NASDAQ:WING): "A potential 500bps reduction in the tax rate could support an incremental 6-7% EPS increase in our model," said restaurant analyst Andy Barish."We expect this to be slightly more impactful than franchised peers where there is higher global/international exposure."
• Valvoline (NYSE:VVV): "In our view, due to having one of the highest tax-rates in the group at 25.5% in '24, the company is a potential top beneficiary from lower corporate tax rates," said automotive aftermarket analyst Bret Jordan. "A 500bps reduction in corporate tax would reduce the ‘25 rate from ~25% to ~20%, driving a ~6% boost to adj EPS."
• Hilton Worldwide Holdings (NYSE:HLT): "We estimate an increase of approximately $27M (~1%) in FY25 adj. FCF for each 100bps of tax rate reduction," said gaming. lodging and leisure analyst David Katz. "Specifically, a 500bps reduction in the effective tax rate to ~25.7% implies a $134M (7%) increase in FY25 adj. FCF and EPS upside leading to +$8/sh, holding all else equal."
• Best Buy (NYSE:BBY): "Using CY25 street estimates, if the U.S. corporate tax rate were to fall ~500bps, BBY’s annual tax rate would decrease from ~24% to ~19% while increasing net income + EPS by ~6%," said Jonathan Matuszewski, hardlines analyst. "The additional $93M of cash generated would likely be used to accelerate the pace at which the company is buying back shares and updating interior store displays."
• Bright Horizons Family Solutions (NYSE:BFAM): "The benefit to BFAM of a 500bp tax rate cut would be a roughly ~7% increase in FCF and ~9% increase in earnings vs current expectations," said diversified services analyst Stephanie Moore. "We’d expect the benefit for BFAM and its only pureplay competitor, KinderCare (not covered), to be roughly the same."
• TopBuild (NYSE:BLD): "Based on our '25 estimates, a 500 bps reduction in the tax rate would translate to ~$45M of cash savings for BLD which is ~1% of sales," said building products analyst Philip Ng. "We could see BLD using cash tax savings to step up buybacks or to continue expanding market share and product adjacencies through M&A."
• Post Holdings (NYSE:POST): "We estimate POST generates ~80-90% of revenues from the U.S., meaning a change in tax policy could lower the company’s rate by ~400-450bps. This could increase POST’s FCF by ~4% over the next three years vs. our current estimates," Rob Dickerson, Jefferies' food analyst, said.
• BellRing Brands (NYSE:BRBR): "We think a ~500bps cut to the corporate tax rate would deepen near-term reinvestment plans for innovation and marketing to create capacity for fast debt pay-down and buybacks in the out-years," said Kaumil Gajrawala, analyst for beverages, consumer products, health & wellness, said. "Holding our growth and margin assumptions constant, we estimate a ~500bp cut (24.5% to 19.5% GAAP for BRBR) would boost near-term profit/EPS by 6-7%."
• Performance Food Group (NYSE:PFGC): "PFGC currently has the highest effective tax rate of the group, and the highest leverage/interest expense burden given recent acquisitions," said food retail & distribution analyst Alex Slagle. "A potential 500bps reduction in tax rate could support an incremental MSD-HSD% (mid-to-high single-digit percentage) increase in EPS, slightly more impactful than peers."
• BJ's Wholesale Club (NYSE:BJ): "A 500bps tax cut could improve our current base case FY25 EPS estimate of $4.30 by $0.30 to $4.60, a ~7% upside, or an extra ~$40M net income," discount retailer analyst Corey Tarlowe said. "The company uses its cash to grow the business, support membership, merchandising, digital and real estate initiatives and drive returns to shareholders."
• Palomar Holdings (NASDAQ:PLMR): "With 100% of PLMR’s business written in the US we could see corporate tax reform improving ‘25/26 EPS by 7-9%," said P&C insurance/insurtech analyst Andrew Andersen. "We believe tax reform savings could accelerate growth in nascent lines by: 1) hiring additional underwriters, 2) accelerating the company’s technology capabilities to compete more efficiently, and/or 3) tuck-in M&A."
• LPL Financial (NASDAQ:LPLA): "We are currently modeling a tax rate of 25.4% from FY24-26. If taxes were to lower by 5% across the board, we estimate a 6.7% annual EPS accretion in FY25 and FY26," said Dan Fannon, analyst covering brokers, asset managers and exchanges. "In terms of peers, a 5% reduction in tax rate results in 7% annual EPS accretion at Charles Schwab (SCHW, Buy, PT: $84), and 6.6% at Raymond James (RJF, Hold, PT: $135)."
• Enova International (NYSE:ENVA): "Our high-level scenario analysis reveals a 5% tax reduction will result in a 10% accretion to ENVA's EPS," said consumer finance analyst John Hecht. "Furthermore, studies show lower taxes correlate with lower net charge-off rates. A 1% reduction in the net charge-off rate results in an incremental 15% accretion to the company's EPS." In a lower tax environment, ENVA's total EPS accretion can add up to 25%, he said.
• Globus Medical (NYSE:GMED): "Regarding potential tax reform, we estimate a 500bps drop in the tax rate would boost our ’26E EPS by 7% and increase net income by $37M," Matthew Taylor, who covers medical supplies and devices, said. "We expect GMED would use incremental capital to invest in the business and do tuck-in M&A"
• Elevance Health (NYSE:ELV): "A benefit from the corporate tax rate falling 500bps for ELV would be $500-$600M of incremental FCF, or a ~10% increase vs. the current run rate," managed care analyst David Windley said.
• Carlisle Companies (NYSE:CSL): "We estimate that a 500bps cut in the corporate tax rate will lower CSL's total effective tax rate to ~19% (vs. ~24% currently), providing ~6% upside to our '25 EPS estimate (we are looking for 6% organic growth in 2025 with 1% driven by acquisitions)," wrote Saree Boroditsky, multi-industrials analyst. "CSL should be able to use increased cash flow, $130M higher combined over FY25-26E, from a lower tax rate to support acquisitions and share buybacks."
• Heico (NYSE:HEI): "With a tax rate estimated to average 20% in '25 - '27, we estimate a reduction to a ~15% rate would yield $0.30/$0.31/$0.36 of EPS savings in each '25/'26/'27, respectively" said Sheila Kahyaoglu, aerospace & defense and airlines analyst. "On a FCF basis, we estimate a reduction to a 15% tax rate would yield $42/$44/$51M of incremental FCF over the same period, for a cumulative FCF benefit of $137M."
• Delta Air Lines (NYSE:DAL): "While most airlines are not in a cash-tax-paying position, DAL is expected to begin paying cash taxes late in '25," Kahyaoglu said. "We estimate a ~24% average statutory tax rate in '25-'27, implying $0.83/$0.91/$1.00 of EPS savings in each of '25/'26/'27, respectively."
• SiteOne Landscape Supply (NYSE:SITE): "The company currently pays an annual tax rate of ~24%. We estimate a decline in the blended rate to ~20% would yield an additional $10-15M in net income and boost EPS by ~$0.25 which represents a 7% increase," said distributors analyst Steve Volkmann.