<< Definition of ‘Consumer Staples’
Hershey (HSY)
“We (Hershey) expect 2014 net sales growth to be within our 5 to 7 percent long-term target, including the impact of foreign currency exchange rates. As has been the case for many years, Hershey is a gross margin focused company. We have solid productivity and cost savings initiatives in place and, while early in the planning cycle, we expect adjusted gross margin expansion next year that will drive 2014 growth in adjusted earnings per share-diluted in the 9 to 11 percent range, in line with our revised long-term target.”
Colgate-Palmolive (CL)
“As we (Colgate-Palmolive) look ahead to 2014, while our global budget process is in its initial stages, based on the Company’s current growth momentum and our confidence in the strength of our global growth and efficiency program, we are planning for a year of gross margin expansion and double-digit earnings per share growth, on a dollar basis based on current spot rates, excluding charges related to the 2012 Restructuring Program.”
3Q Emerging Markets Growth: 9.5%
Unilever (UN)
“Underlying sales growth of 4.4% over the first nine months is ahead of our (Unilever’s) markets. Emerging markets continue to be the main driver of our growth and, despite the current slow-down, they remain a significant growth opportunity which the company is well-placed to capitalise on. We have not yet seen an improvement in market conditions in North America or Europe.”
3Q Emerging Markets Growth: 5.9%
Valuentum’s Take
News flow has been mostly positive in the consumer staples (XLP) space during the third quarter, and outlooks have been encouraging. We were impressed with Hershey’s outlook for 2014, which showcases a nice high-single-digit top-line growth trajectory. Colgate-Palmolive’s 2014 outlook was equally impressive, and double-digit earnings-per-share growth at the company is a noteworthy target for the year. The emerging-market expansion the firm experienced was also consistent with the robust performance we saw in Unilever’s third-quarter trading update (despite the firm noting that the rate of expansion has slowed). We liked the fundamental developments at each firm, but we point to Procter & Gamble (PG) and Altria (MO), two core holdings in the portfolio of our Dividend Growth Newsletter, as our favorite consumer staples exposure on the basis of their fantastic Valuentum Dividend Cushion scores.