Consumer Cyclical: Assessing Disruptions in Restaurant, Retail, and Travel
Changing consumer preferences and technological innovations have led to valuation shifts across different consumer cyclical industries.
Our consumer cyclical universe trades at an average price/fair value of 1.02--a shade below Morningstar's overall coverage universe at 1.03--suggesting that market valuations are generally aligned with our longer-term revenue growth and margin expansion forecasts. Although sentiment among affluent consumers appears relatively healthy, and we expect growth out of our discretionary names (albeit at a decelerating pace), we're monitoring spending among high-end consumers, which tend to take spending cues from asset and equity market valuations. A meaningful reversal in high-end spending would not only have an adverse impact on discretionary names, but it would also have implications across the broader consumer sector.
R.J. Hottovy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.