What’s Impacting Consumer Product Markers?



Series overview

Some notable consumer product companies have reported their quarterly results. In this series, we’ll revisit their performances and focus on some key takeaways. We’ll also look at their financial performances and stock price movements since their earnings releases. We’ll also discuss the outlook for these companies and look at analysts’ recommendations and valuations.

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Stock price movements after earnings

The graph above shows that most of the key consumer product companies, with the exception of Clorox (CLX), didn’t impress investors much with their recently reported quarterly results. Consumer product makers in the United States (SPY) are battling moderating category growth. Pricing pressure due to increased competitive activity and a challenging retail environment are also putting pressure on the financials of these companies. To make matters worse, inflation in raw material prices and higher logistics costs remained a drag on margins.

Amid challenges, consumer product manufacturers are relying on innovation and cost-saving measures to remain afloat. Favorable currency rates during the last quarter brought some respite to these companies.

However, industry-wide challenges aren’t likely to subside in the near term and are expected to continue to hurt the financials of these companies. Pressure on margins from soft volumes and increased input costs could restrict their profitability growth rates.

Since the last reported quarter, Procter & Gamble (PG) and Church & Dwight (CHD) stock have fallen 3.4% and 2.9%, respectively, as of November 24, 2017, reflecting pressure on margins. On the other hand, Clorox stock has risen 7% since it posted its strong fiscal 1Q18 results. Kimberly-Clark (KMB) and Colgate-Palmolive (CL) stock have risen 2.7% and 1.1%, respectively.

In comparison, the Consumer Staples Select Sector SPDR ETF (XLP) has risen 1.7% in the past month, and the S&P 500 (SPX-INDEX) has risen 1.5%.


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