Future Outlook Of The Consumer Staples Industry And Revlon Inc (NYSE:REV)
Revlon Inc (NYSE:REV), a US$1.19B small-cap, is a consumer staples company operating in an industry which faces a structural shift resulting from the growth in consumer power. As consumers hold more information, brands must compete more effectively via differentiation. Consumer staple analysts are forecasting for the entire industry, a relatively muted growth of 6.27% in the upcoming year , and an optimistic near-term growth of 28.40% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Revlon is lagging or leading in the industry. View our latest analysis for Revlon
What’s the catalyst for Revlon’s sector growth?
The personal product market growth has been driven predominantly by factors such as innovative and eco-friendly design, shifting demographics and consumer tastes, as well as the e-commerce channels influencing sales. In the past year, the industry delivered growth in the teens, beating the US market growth of 11.54%. Revlon lags the pack with its earnings falling by more than half over the past year, which indicates the company will be growing at a slower pace than its personal products peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 62.82% in the upcoming year.
Is Revlon and the sector relatively cheap?
The personal product sector’s PE is currently hovering around 21.28x, relatively similar to the rest of the US stock market PE of 18.15x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 15.77% compared to the market’s 10.60%, potentially illustrative of past tailwinds. Since Revlon’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Revlon’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Revlon’s industry-beating future is a positive for investors. If Revlon has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the personal products industry. However, before you make a decision on the stock, I suggest you look at Revlon’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has REV’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Revlon? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
