Consumer Staples Become This Earnings Season's Punching Bag

(Bloomberg) -- This earnings season has not been kind to consumer staples stocks, at least not so far.

Shares of the S&P 500 Consumer Staples Index have lost 4 percent since the beginning of the earnings season. That’s roughly the same as the combined losses in five other S&P sectors that have traded to the downside since the earnings season kicked off. The S&P 500 Index has slid 0.2 percent during that time.

Bears are in an unforgiving mood this earning season as they’re scrutinizing the prospects of the sector that’s been struggling with squeezed margins, weak organic sales growth and rising interest rates. Some of the group’s biggest constituents have been its worst losers. Procter & Gamble Co. is down 7.3 percent since reporting disappointing margins and organic sales. Philip Morris International, the fifth-biggest constituent in the sector, is down 20 percent in the past six sessions after reporting disappointing quarterly results.

Read More: Bad News for Staples Companies Continues

Not that all of the sector’s earnings reports were a miss: in fact, results have, on average, come in 6.9 percent ahead of expectations, data compiled by Bloomberg show. That hasn’t translated into a share price advance: the stocks fell an average 2 percent on the first day post-results, more than any other sector in the S&P 500.

The sector’s bulls are looking to the next few days for a much-needed uplift, with companies including Colgate-Palmolive Co., Clorox Co. and Kraft Heinz Co. scheduled to report quarterly results. So far on Thursday, the sector traded in the green, with a rally in PepsiCo Inc. on an EPS beat offsetting losses of 2.1 percent in Kellogg Co. after Prescience Point shorted the stock amid a 35 percent downward potential. Altria Group Inc. slid 2 percent after reporting weak first-quarter cigarette shipments, while Hershey Co.’s gross margin miss sent shares lower by 1.1 percent.

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net.

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Christiana Sciaudone

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