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Notre Dame Investment Club hears pitches for Escalade and Vizio

| Wednesday, March 23, 2022

The Notre Dame Investment Club heard pitches for leisure and sporting goods manufacturing company Escalade Inc. and television company Vizio Inc. Members of the club, which manages a portfolio of over $1M as part of the University endowment, thoroughly critiqued and evaluated the pitches.

Sophomores Francesca Capannari, Daniel Baptist and Kevin Maxim pitched Escalade. The group’s pitch focused on Escalade’s ability to capitalize on the growing sporting goods manufacturing industry and projected growth in health consciousness. 

Escalade had a 12.8% compound annual growth rate (CAGR) since 2016, with a total revenue of $313.6 million and $24.4 million, Baptist said. Capannari said the group expects the sporting goods industry to grow in the near future as youth sports leagues restart and children look to rejoin sports after a pandemic pause or start playing new ones.

“There’s a foreseeable increase in demand for sporting goods as well as general participation in sports,” Capannari said. 

The group said Escalade’s strategic acquisitions have developed a strong brand presence for the company and cleared a path for Escalade to take advantage of potential market leadership opportunities. 

Recent acquisitions by Escalade include the assets of Brunswick Billiards in early 2022, Victory Tailgate in 2018 and pickleball company Onix in 2015. 

In addition to sports leagues restarting, Maxim said the recent national increase in disposable income should continue to give families more money to spend on sporting goods and leisure activities and spark growth in the industry.

The group highlighted Escalade’s ability to search for emerging markets and take advantage of early value opportunities. Capannari said the company has been very active in the in-ground basketball space, the table tennis market and the water sports gear industry. 

Maxim noted one major risk Escalade and the rest of the leisure sports industry face. With people returning to work following pandemic pauses, leisure time is likely to decrease across the country, potentially hindering the industry’s prospects, he said. 

Following a series of questions, the group said their recommendation was to buy.

First-years Tucker Lawrence, Luke Hogan, Colin Chalk and Patrick Hanley pitched Vizio for the second pitch of the night. One of the leaders in the TV industry, Vizio is currently in the midst of transitioning into the increasingly competitive streaming industry.

The group said recent profit increases resulting from SmartCast, its streaming platform, bode well for the company’s future. In the 2021 fiscal year, 69% of Vizio’s growth profit came from SmartCast compared to 31% from TVs and components. 

Chalk acknowledged recent performance declines from Vizio though he said he expects a perceived competitive advantage to allow Vizio to eventually succeed in the streaming industry. Because it is difficult for companies to capture market share in the crowded streaming industry, Vizio is at an advantage because consumers can buy a Smart TV that already comes with SmartCast instead of needing some sort of third-party device to run other streaming platforms such as Roku.

“We think Vizio has a competitive edge here because they already have a really high market share in the TV industry and all of their streaming stems from that TV, whereas something like Roku, you’re buying that device, plugging it into whatever TV you have,” Chalk said.

Attendees questioned Vizio’s growth prospects, calling to attention concerns about the future of TV manufacturing with the rise of streaming on mobile devices and Vizio’s late entry into the crowded and fiercely competitive streaming market.

Lawrence said Vizio’s acquisition of automatic content recognition company InScape and partnerships with Magid Research and Verizon Media give Vizio a major edge in acquiring consumer data and putting it to use to move the company forward.

The group’s recommendation was to buy Vizio.

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About Ryan Peters

Ryan is a sophomore in Knott Hall from Lake Forest, Illinois. He is majoring in business analytics and minoring in constitutional studies. He currently serves as Notre Dame News Editor for The Observer. Follow him on Twitter @peterrsryan.

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