Consumer Staples

The Consumer Staples Sector comprises companies whose businesses are less sensitive to economic cycles. It includes manufacturers and distributors of food, beverages and tobacco and producers of non-durable household goods and personal products. It also includes food & drug retailing companies as well as hypermarkets and consumer super centers.

Last % Change Market Cap Market Weight Weighting Recommendations
S&P Capital IQ Ned Davis Research (PDF) Log in required.
-0.81% $3.73T 9.46% Underweight -0.20%

Sector Commentary from Standard & Poor's

CFRA recommends underweighting the S&P 500 consumer staples sector, as we project this interest-sensitive sector to record below-market EPS growth in 2017. In addition, we expect investors to gravitate toward more cyclical sectors as a result of a projected increase in defense and infrastructure spending under the new Republican administration. Year-to-date through April 3, 2017, the S&P 500 consumer staples index, which represented 9.3% of the S&P 500 index, was up 5.5% in price, compared with a 5.4% rise for the S&P 500. In 2016, this sector index rose 2.6%, versus a price advance of 9.5% for the 500. There are 12 sub-industry indices in this sector. Household products is the largest, representing nearly 20% of the sector's market value, while brewers is the smallest, accounting for approximately 1% of the sector.
The cap-weighted average of this sector's component company CFRA STARS (STock Appreciation Ranking System) is 3.9 out of 5.0, as compared to a cap-weighted average of 3.7 for the S&P 500. Also, the percentage of stocks in the S&P 500 consumer staples sector that carry favorable investment recommendations is above average versus the market as a whole. The sub-industries within this sector that currently show the highest average STARS are household products, hypermarkets & super centers, and soft drinks. Those with the lowest average STARS include agricultural products, distillers & vintners, food distributors, and food retail. According to S&P Capital IQ Consensus Estimates, the sector is projected to record an 5.7% year-over-year increase in operating earnings per share in 2017, as compared with the S&P 500's estimated EPS gain of 10.3%. During 2016, this sector posted a 3.7% rise in EPS, versus a 0.4% increase for the S&P 500. In addition, revenues for the sector are forecast to increase by 3.1% in 2017 versus the S&P 500's projected rise of 5.2%. The sector's price-to-earnings ratio of 20.7X, based on consensus 2017 operating EPS estimates, is well above the S&P 500's forward P/E of 18.2X. S&P Capital IQ also reports that the consensus long-term EPS growth estimate for this sector is 8.9% versus the S&P 500's 12.3%, giving the sector a P/E-to-projected EPS growth rate (PEG) ratio of 2.3X, which is well above the broader market's PEG of 1.5X. Finally, this sector pays a dividend yield of 2.7%, as compared with the yield of 2.0% for the S&P 500.
CFRA's proprietary technical indicator for this sector currently shows a negative reading. In researching the past market history of prices and trading volume for each company, CFRA's computer models apply special technical methods and formulas to identify and project price trends for the sector.


Understanding Weighting Recommendations

Sector weighting recommendations are provided by independent, third-party research firms to help further refine your analysis.

Some sectors get "over," "market," or "under" weighted, which means that the research firm recommends that more, the same, or less of the sector should be held in your portfolio than is held in the market.

Learn more about the average recommendation holding period and methodology of the research firms:

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U.S. Sectors & Industries Performance is represented by the S&P 500 GICS® (Global Industry Classification Standard) indices. Last % change is the nominal change in the price of the index from the previous trading day's close expressed as a percentage as of the index value at the time noted in the Date & Time field. All dates and times are reported in ET.

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