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Consumer Staples Sector Analysis: Performance, Valuation, and Recommendations

This report provides a comprehensive analysis of the Consumer Staples sector, including its size, composition, and key industry performances against the S&P 500. We examine the economic and financial metrics influencing sector dynamics, highlighting top companies and their market capitalizations. Insights into valuation analyses, forward P/E ratios, and absolute versus relative ratios are discussed. Recommendations for portfolio adjustments suggest reducing weight in the SIM portfolio to align with S&P benchmarks. We conclude with a Q&A section addressing common inquiries regarding the sector's outlook.

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Consumer Staples Sector Analysis: Performance, Valuation, and Recommendations

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  1. Consumer Staples Taylor Captline Matthew Chadwell Hadd Francis

  2. Agenda • Size andComposition • Business Analysis • Economic Analysis • Financial Analysis • Valuation Analysis • Recommendation • Q&A

  3. 41 companies • 11.82% of S&P 500 • Sector Industries include: • Agricultural Products • Brewers • Distiller and Vinters • Food Distributors • Household Products • Hypermarkets and Supermarkets • Packaged Foods and Meats • Personal Products • Retail – Drugs • Retail – Food • Soft Drinks • Tobacco Sector Components

  4. Largest Companies within Consumer Staples Top 10 account for 73.4% of sector market cap.

  5. Sector Performance • Consumer Staples performing below S&P 500 daily, MTD, QTD and YTD Information gathered from S&P500 website

  6. Performance of Industries in Sector

  7. S&P500 vs. SIM Portfolio Consumer Staples is currently weighted at 13.06% in the SIM compared to 12.04% in the S&P 500. It is currently overweight by 102 bps.

  8. Agenda • Size and Composition • BusinessAnalysis • Economic Analysis • Financial Analysis • Valuation Analysis • Recommendation • Q&A

  9. Demand • Life cycle Domestic International

  10. Demand • Business cycle • Bernanke testified today that recession should end later this year.

  11. Sector Characteristics

  12. Agenda • Size and Composition • Business Analysis • EconomicAnalysis • Financial Analysis • Valuation Analysis • Recommendation • Q&A

  13. Leading Indicators

  14. Agenda • Size and Composition • Business Analysis • Economic Analysis • FinancialAnalysis • Valuation Analysis • Recommendation • Q&A

  15. Forward P/E to S&P 500 Trailing P/E to S&P 500

  16. Price Net Profit Margin to S&P 500 ROE to S&P 500

  17. Agenda • Size and Composition • Business Analysis • Economic Analysis • Financial Analysis • ValuationAnalysis • Recommendation • Q&A

  18. Forward P/E of Consumer Staples Industries • AGPRD – mean reversion • Hit hard by recession • HYPMK – stable • TBACO – stable but not showing signs of large growth

  19. Absolute Ratios Price to Sales Price to Book

  20. Absolute Ratios Price to CF • Mean Reversion

  21. Relative to S&P 500 Price to Sales Price to Book

  22. Relative to S&P 500 Price to CF • Current values extremely close to mean values

  23. Sector Comparisons

  24. Agenda • Size and Composition • Business Analysis • Economic Analysis • Financial Analysis • Valuation Analysis • Recommendation • Q&A

  25. Recommendation • Reduce sector weight in SIM portfolio by 124 basis points to bring in line with S&P 500. • Economic indicators signal recovery • Sector appears fairly valued

  26. Q&A What Questions Do You Have?

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