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Quarter-End Insights

Consumer Defensive: Hungering for Top-Line Gains

Even amid sluggish growth, pockets of value remain for long-term investors.

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  • Consumer defensive valuations strike us as a touch inflated, with the sector trading at about a 2% premium to our fair value estimates on a market-cap-weighted basis.
  • Although firms throughout the space remain laser-focused on driving further efficiencies, these efforts to extract costs have failed to offset languishing top-line trends.
  • As such, we aren't surprised that mergers and acquisitions were once again at the top of the agenda this quarter, with  Campbell Soup (CPB) poaching Snyder's-Lance (LNCE) and Hershey (HSY) scooping up Amplify Snack Brands.
  • This tepid growth has also whetted the appetite of activist investors looking to cook up change. 


Erin Lash does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.