Consumer spending climbed gradually in April, with consumers boosting their purchases at online stores and spending more at restaurants and bars, demonstrating resilience in the face of growing headwinds. Retail sales in the United States increased 0.4% in April 2023.
So, investors could consider buying quality consumer stocks Henkel AG & Co. KGaA (HENKY), Shiseido Company, Limited (SSDOY) and Acme United Corporation (ACU).
Oren Klachkin, lead US Economist at Oxford Economics, said, “The April retail sales report shows consumers remain inclined to spend though they are becoming more selective in their purchases.”
In addition, consumer packaged goods market is expanding with technological advancements. The consumer-packaged goods market is expected to grow at a CAGR of 3.5% until 2030.
Investors’ interest in consumer goods stocks is evident from the iShares U.S. Consumer Goods ETF’s (IYK) 1.4% returns over the past three months.
Let’s delve deeper into the fundamentals of the stocks mentioned above.
Henkel AG & Co. KGaA (HENKY)
Headquartered in Düsseldorf, Germany, HENKY together with its subsidiaries, engages in the adhesive technologies, beauty care, and laundry and home care businesses worldwide.
In terms of forward EV/EBIT multiple, HENKY is trading at 13.73 is 10.5% lower than the industry average of 15.34. In addition, HENKY’s forward EV/Sales of 1.51x is 9.3% lower than the industry average of 1.66x.
HENKY’s trailing-12-month net income margin of 5.62% is 78.2% higher than the industry average of 3.16%. Its trailing-12-month gross profit margin of 42.30% is 34.9% higher than the industry average of 31.36%.
HENKY’s sales increased 11.6% year-over-year to €22.40 billion ($24.14 billion) in the for the year ended December 31, 2022. Its gross profit increased 4.4% year-over-year to €9.37 billion ($10.09 billion).
Also, its total current assets came in at €10.43 billion ($11.23 billion) for the period that ended December 31, 2022, compared to €10.41 billion ($11.22 billion) for the period that ended December 31, 2021. Also, its current liabilities came in at €9.15 billion ($9.86 billion), compared to €9.27 billion ($9.99 billion) for the same period.
The consensus revenue estimate of $23.68 billion for the year ending December 2024 represents a marginal increase year-over-year. HENKY’s shares have gained 14% over the past nine months to close the last trading session at $18.38.
HENKY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
HENKY also has an A grade for Stability and a B for Growth. It is ranked #12 out of 51 stocks in the Consumer Goods industry. Click here for the additional POWR Ratings for Value, Sentiment, Momentum and Quality for HENKY.
Shiseido Company, Limited (SSDOY)
Headquartered in Tokyo, Japan, SSDOY is a company that manufactures and sells cosmetics, toiletries, personal care products, barber, and beauty products. The company offers fragrances, body and hair care products, as well as skincare products. It is also engaged in the restaurant, food, and retail businesses and operates beauty salons.
SSDOY’s trailing-12-month gross profit margin of 69.58% is 121.9% higher than the 31.36% industry average. Its trailing-12-month net income margin of 3.59% is 13.6% higher than the 3.16% industry average.
SSDOY’s net sales increased 2.6% year-over-year to ¥240 billion ($1.73 billion) in the first quarter that ended March 31, 2023. Its core operating profit rose 186.3% from the prior-year value to ¥12.53 billion ($90.50 million). Its profit increased 61.7% year-over-year to ¥9.19 billion ($66.38 million), while its earnings per share came in at ¥21.71, up 97.4% year-over-year.
Analysts expect SSDOY’s revenue to increase 219.4% year-over-year to $7.44 billion in 2023. Its EPS is expected to grow 39.4% to $0.81 in 2023. The stock has gained 22.2% over the past nine months to close its last trading session at $49.34.
It’s no surprise that SSDOY has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Stability and Quality. It is ranked #13 in the same industry.
Beyond what is stated above, we’ve also rated SSDOY for Sentiment, Momentum, Value, and Growth. Get all SSDOY ratings here.
Acme United Corporation (ACU)
ACU supplies first aid and safety, cutting, sharpening, and measuring products to the school, home, office, hardware, sporting goods, and industrial markets in the United States, Canada, Europe, and internationally.
ACU’s trailing-12-months EV/Sales multiple of 0.71 is 57% lower than the industry average of 1.64. Its trailing-12-months Price/Sales multiple of 0.44 is 65.8% lower than the industry average of 1.30.
ACU’s trailing-12-month gross profit margin of 33.02% is 10.2% higher than the 29.96% industry average. Its trailing-12-month asset turnover ratio of 1.27x is 58.5% higher than the 0.80x industry average.
ACU’s net sales came in at $45.84 million for the fiscal first quarter that ended March 31, 2023, up 5.8% year-over-year. Also, its gross profit increased 8.8% year-over-year to $16.28 million. Its operating income and EPS came in at $2.18 million and $0.28, up 59.6% and 27.3% year-over-year, respectively.
Street expects ACU’s revenue to increase 4.1% year-over-year to $201.86 million in 2023. Its EPS is expected to increase 107.3% year-over-year to $1.7 in 2023. Over the past six months, the stock has gained 6.2% to close the last trading session at $24.68.
ACU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #10 in the same industry. It has a B grade for Value and Stability. To see additional ACU’s rating for Growth, Momentum, Sentiment, and Quality, click here.
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HENKY shares were trading at $18.27 per share on Wednesday afternoon, down $0.11 (-0.60%). Year-to-date, HENKY has gained 15.36%, versus a 7.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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