Chicago, IL – March 25, 2025 – Today, Zacks Equity Research Equity areThe Procter & Gamble Co. PG, Colgate-Palmolive Co. CL, Kimberly-Clark Corp. KMB and The Clorox Co. CLX.
Industry: Consumer Staples
Link: https://www.zacks.com/commentary/2433972/4-consumer-product-stocks-to-keep-an-eye-on-despite-market-challenges
Companies in the Zacks Consumer Products – Staples industry are facing challenges due to a tough consumer environment. Escalated cost of living is impacting consumer spending, which, in turn, affects industry sales. In addition, many companies in the consumer goods sector are grappling with higher raw material costs and increased selling, general and administrative (SG&A) expenses.
Despite these challenges, demand for essential products remains robust. Leading companies such as The Procter & Gamble Co., Colgate-Palmolive Co.,Kimberly-Clark Corp. and The Clorox Co. are successfully navigating these pressures through strategic optimization, with a strong emphasis on innovation and digital development.
The Zacks Consumer Products – Staples industry consists of companies involved in marketing, producing and distributing a wide range of consumer products. These include personal care items, cleaning equipment, stationery, bed and bath products and household goods like kitchen appliances, cutlery and food storage. Some industry participants also provide batteries and lighting products, whereas some offer pet food and treats, pet supplies, pet medications and pet services.
Companies in the Consumer Products – Staples universe offer products to supermarkets, drug/grocery stores, department stores, warehouse clubs, mass merchandisers and other retail outlets. Some companies sell products to manufacturers of perfumes and cosmetics, hair and other personal care products. Products are also sold through other distributors and the fast-growing e-commerce channel.
Encountering Higher Costs in a Challenging Landscape: The consumer goods industry is navigating a challenging landscape marked by elevated costs in raw materials, labor and transportation. These rising expenses can put a squeeze on profit margins, especially if companies struggle to pass these costs on to customers through price increases.
In addition, the burden is compounded by increased spending on SG&A expenses, alongside investments in digital transformation and expanded marketing strategies. Many firms are vulnerable to shipping disruptions, which can result in delays and higher freight expenses, squeezing overall profit margins. In response, companies are adopting restructuring initiatives and implementing cost-saving measures to help mitigate these pressures and safeguard profitability.
Consumer Spending Volatility: Companies in The Consumer Products – Staples industry are navigating a volatile macroeconomic environment, marked by dynamic consumer behavior, particularly among lower-income segments. Escalated living costs and shrinking savings are creating challenges for these consumers, which affects industry sales. Given that the industry partly relies on sales from middle and lower-income groups, it remains susceptible to these economic shifts, potentially resulting in decreased sales volumes.
Maximizing Revenues Through Strategic Optimization: Players in the consumer products space have been refining their operations to optimize revenue generation, which includes a strong focus on enhancing e-commerce and digital initiatives. They are also innovating to cater to evolving consumer demands, such as prioritizing healthier food options, incorporating eco-friendly packaging and leveraging technology to enhance convenience.
These efforts not only fuel growth but also help maintain competitiveness in an ever-changing market. Many industry players are reshaping their portfolios by pursuing strategic acquisitions and divestitures, enabling a sharper focus on high-growth areas.
The Zacks Consumer Products – Staples industry is housed within the broader Zacks Consumer Staples sector. It currently carries a Zacks Industry Rank #152, which places it in the bottom 38% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually becoming less confident about this group’s earnings growth potential. Since the beginning of January 2025, the industry’s consensus estimate for current financial year earnings has decreased 0.4%.
The Zacks Consumer Products – Staples industry has lagged the S&P 500 Index while outpacing the broader Zacks Consumer Staples sector over the past year.
The industry has risen 8.4% over this period compared with the S&P 500 Index’s growth of 9.1%. Meanwhile, the broader sector has advanced 1.4%.
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing consumer staple stocks, the industry is currently trading at 21.03X compared with the S&P 500’s 20.78X and the sector’s 17.31X.
Over the last five years, the industry has traded as high as 23.73X, as low as 17.8X and at the median of 20.95X.
Procter & Gamble: It is a leading provider of everyday consumer products and carries a Zacks Rank #3 (Hold). Procter & Gamble’s strategy centers around sustainability and adaptability, aligning with the evolving demands of consumers, customers and society. At the heart of P&G's approach is its “constructive disruption” strategy, which focuses on proactively adjusting to industry shifts and driving innovation for long-term growth.
Strong brand loyalty enables the company to maintain premium pricing, sustain market share and reinforce its leadership position. In addition, Procter & Gamble has realized substantial cost savings and is actively identifying opportunities through its three-year rolling productivity master plans.
The Zacks Consensus Estimate for Procter & Gamble’s current fiscal-year earnings per share (EPS) has increased from $6.91 to $6.93 in the past 30 days. This suggests growth of 5.2% from the year-ago period. PG shares have risen 4.1% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Colgate-Palmolive: It is a global leader in the oral care hygiene market and continues to benefit from strong pricing strategies and productivity initiatives like the funding-the-growth program. Colgate remains focused on core and premium innovation, increasing advertising investments and expanding capabilities to strengthen its brand and boost household penetration. CL’s commitment to enhancing digital, data and analytics capabilities reinforces its competitive edge and long-term profitability prospects.
Although the Zacks Consensus Estimate for Colgate’s current fiscal-year EPS has moved down by a couple of cents in the past 30 days, the projection indicates growth of 3.1% from the year-ago period. Shares of the Zacks Rank #3 company have risen 1.9% in the past year.
Kimberly-Clark: This Zacks Rank #3 company’s Powering Care Strategy drives its transformation by focusing on growth, operational efficiency and streamlined organizational alignment. Through this strategy, Kimberly-Clark concentrates on three main areas: accelerating innovation, optimizing margin structure and restructuring for growth. KMB’s transition to a volume-and-mix-led growth strategy is also yielding results.
Apart from this, Kimberly-Clark is focused on productivity gains to counter inflationary pressures and currency fluctuations, aiming to maintain gross margin targets through strategic cost management and efficiencies. The Zacks Consensus Estimate for KMB’s current financial year EPS has remained unchanged at $7.50 in the past 30 days. This suggests growth of 2.8% from the year-ago period. Shares of this consumer products giant have jumped 10.8% in the past year.
Clorox: This consumer products company remains well-poised on a solid innovation pipeline, digital transformation and pricing and cost-saving initiatives. Clorox is advancing its IGNITE strategy, focusing on innovation and expansion across key business areas to accelerate growth and long-term success. CLX’s IGNITE strategy is on track to achieve long-term financial targets. The company is progressing in international markets, leveraging its Go Lean strategy to drive profitable growth while selectively investing in high-return opportunities for global expansion.
The Zacks Consensus Estimate for Clorox’s current fiscal-year EPS has remained unchanged at $7.15 in the past 30 days. This suggests growth of 15.9% from the year-ago period. Shares of this Zacks Rank #3 company have declined 3.8% in the past year.
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