US Consumer Staples: The Weekly Tab: Mind The Gap

Research evidence excerpt

US Consumer Staples: The Weekly Tab: Mind The Gap

most investors already viewed the targets as aspirational, especially as the

fundamental narrative for the company remains unchanged. And while we think

top/bottom line visibility remains strong, we would wait for a pullback in shares or

further upside to estimates before becoming constructive given expensive

valuation.

Reynolds (Neutral): REYN reported a 2Q beat driven by better top line growth

and stronger margin delivery, while raising its FY26 revenue outlook but

maintaining adjusted EBITDA and EPS (link).While the quarter came in better-than-

expected, we think investors will remain focused on the back half, particularly

given the combination of a more challenging commodity backdrop. We walked

away encouraged by the company's ability to deliver on the bottom line despite

this external volatility but with shares trading largely in-line with historical averages

relative to peers, we would wait for a more attractive entry point and/or greater

visibility that there is upside to estimates before becoming constructive.

Hershey (Neutral): HSY reported a 2Q EPS beat driven by stronger organic sales

and better margins (albeit slightly benefitted by shipment timing, tariff refunds,

and a pullback in A&C) (link). In our view, the key debate remains unchanged and

continues to be focused on the top-line trajectory, particularly given all of the

moving pieces impacting the quarter/year. Specifically, we think many are still

looking for incremental proof/clarity that NACF can maintain current elasticities

given competition within the segment, a dynamic external environment, and noise

in shipment dynamics. With shares still trading at a premium to long-term

averages vs. Packaged Food peers (even despite the QTD pullback), we would