Skip to Content
Morningstar
Get 14 Days Free
Quarter-End Insights

Consumer Cyclical: Confidence, Demographics Support Consumption Gains

E-commerce market share gains present challenges for some, but trends continue to support healthy profitability for many companies.

Dan Wasiolek
Mentioned: , , , , , , , , ,
  • Consumer cyclical sector valuations remained at slightly elevated levels with a weighted average price/fair value ratio of 1.04 versus last quarter's 1.03. We attribute this to rising consumer and corporate confidence, a factor that should support spending across numerous discretionary industries. 
  • We see consumer spend aided by baby boomer, millennial, and emerging market demographic tailwinds over the next several years.
  • Travel is one industry that stands to benefit from favorable sentiment and demographics but should profit from technology investments that support brand, scale, and network advantages held by operators.
  • The convenience and improved user experience of e-commerce continues to take steady share from brick and mortar retail. While we see department stores and the general apparel universe most at risk, newer startups have seen success through an ability to be nimble and to harness the power of technology to improve products and the shopping experience.

Consumer cyclical sector valuations remain a touch overheated, with a weighted average price/fair value ratio of 1.04, compared with last quarter's 1.03. We attribute this to historically high consumer and corporate confidence figures, implying consumers' willingness to spend remains robust.

Dan Wasiolek has a position in the following securities mentioned above: AMZN, TJX, NCLH. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.