Quarter-End Insights

Consumer Defensive: Attractive Opportunities in Competitively Advantaged Stocks

Erin Lash, CFA
  • Across our global consumer defensive coverage universe, valuations have continued to languish, trading at a 5% discount to our fair value estimates on a market-cap-weighted basis.
  • Despite a focus on extracting costs, top-line acceleration has remained elusive across the sector.
  • As a result, M&A again took center stage, including  Nestle's (NESN) purchase of  Starbucks' (SBUX) consumer products range,  Procter & Gamble's (PG) acquisition of German-based  Merck's (MRK) consumer healthcare brands, and  Walmart's (WMT) tie-up with Flipkart (following the sale of its Asda business to  Sainsbury (SBRY)). 
  • Further, this tepid growth has piqued activist investor interest.

Erin Lash, CFA has a position in the following securities mentioned above: PF. Find out about Morningstar's editorial policies.