Top 15 Consumer Defensive Companies by Business Quality
Marvin's rules picked 15 Consumer Defensive companies with the highest Business Quality scores. Procter & Gamble, Darling Ingredients and Costco lead the list, while Perdoceo Education has the highest overall score.
Consumer Defensive companies sell things people tend to need in any economy, such as household products, packaged food, groceries and everyday drinks. This guide lists 15 of them that Marvin's Business Quality score rates highest compared with other companies in the same industry.
Business Quality is a summary of how well a company runs, using measures like profit margins, return on equity and debt. A high score means the company looks strong next to its industry peers. It does not say how the shares might perform.
Keep in mind that margins differ a lot between industries. A tobacco maker and a warehouse-style retailer are scored against their own peers, so a thin margin is not always a weakness. Missing figures are noted in each blurb, so check what is absent as well as what is shown.
The list
How Marvin ranked these stocks
Marvin included companies above about three hundred million dollars in size in the Consumer Defensive sector and ranked them by Business Quality score, highest first, with at most four companies from any one industry. Every Marvin score runs on a scale up to 100 and is relative to each company's own industry, so it shows how a company compares with its direct peers today, not with the whole market.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Consumer Defensive sector, highest Business Quality score first; at most 4 per industry.
The stocks, one by one
The Procter & Gamble Company PG
Procter & Gamble pairs a quality score of 96 with an operating margin of 22.7% and return on equity of 29.5%, which points to a very profitable business. Caution: revenue grew only 3.3% last fiscal year, so expansion is modest.
Darling Ingredients Inc. DAR
Darling Ingredients has a quality score of 89, revenue growth of 7.4% and an operating margin of 14.5%, with debt-to-equity of 0.78. Caution: return on equity is a modest 11.4%, and free cash flow margin is not available to check cash generation.
Costco Wholesale Corporation COST
Costco Wholesale combines revenue growth of 10.1%, return on equity of 25.8% and low debt, with debt-to-equity of 0.28. Caution: its operating margin is only 3.9%, and its opportunity score is a low 29.
Perdoceo Education Corporation PRDO
Perdoceo Education has the highest overall score here, 95, with revenue growth of 24.2%, an operating margin of 24.6% and a free cash flow margin of 25.4%. Caution: debt and gross margin figures are not available.
Philip Morris International Inc. PM
Philip Morris International shows a gross margin of 67.5%, an operating margin of 37.7% and a free cash flow margin of 29.9%, all signs of strong profitability. Revenue growth was 7.3%. Caution: return on equity and debt figures are not available.
Monster Beverage Corporation MNST
Monster Beverage reports an operating margin of 29.2%, a free cash flow margin of 22.8% and return on equity of 22.7%, with growth of 10.7%. Caution: its opportunity score is only 28, and no debt figure is available.
Smithfield Foods, Inc. SFD
Smithfield Foods has a quality score of 96, revenue growth of 9.8% and low debt, with debt-to-equity of 0.26. Caution: its operating margin is a thin 8.6%, and free cash flow margin is not available.
Bunge Global S.A. BG
Bunge Global grew revenue by 32.4% and carries debt-to-equity of 1.01. Caution: its gross margin is just 4.4%, return on equity is 4.3%, free cash flow margin is negative at -1.4%, and operating margin is not available.
Sprouts Farmers Market, Inc. SFM
Sprouts Farmers Market shows revenue growth of 14.1% and a high return on equity of 33.5%. Caution: its operating margin is 7.4% and free cash flow margin is 4.0%, which are thin, and no debt figure is available.
Altria Group, Inc. MO
Altria Group has an operating margin of 46.8% and a free cash flow margin of 38.8%, among the richest in this list. Caution: revenue changed by -3.1% last fiscal year, meaning sales shrank, and return on equity and debt figures are not available.
John B. Sanfilippo & Son, Inc. JBSS
John B. Sanfilippo & Son has low debt, with debt-to-equity of 0.20, and return on equity of 16.3%. Caution: margins are thin, with an operating margin of 7.6% and a free cash flow margin of 3.0%.
Inter Parfums, Inc. IPAR
Inter Parfums has a gross margin of 63.8%, an operating margin of 17.3% and very low debt, with debt-to-equity of 0.19. Caution: revenue growth was only 2.5% last fiscal year, the slowest of the group.
Grand Canyon Education, Inc. LOPE
Grand Canyon Education reports an operating margin of 24.5%, a free cash flow margin of 21.2% and return on equity of 33.5%. Caution: its opportunity score is a middling 47, growth was 7.1%, and debt is not available.
Ingredion Incorporated INGR
Ingredion has a quality score of 93, an operating margin of 11.9% and modest debt, with debt-to-equity of 0.39. Caution: revenue changed by -2.8% last fiscal year, so sales shrank, and free cash flow margin is only 4.9%.
Ollie's Bargain Outlet Holdings, Inc. OLLI
Ollie's grew revenue by 16.6%, with a gross margin of 41.6% and an operating margin of 12.3%. Caution: its quality score of 86 is the lowest on this list, and its free cash flow margin is a more modest 8.0%.
Common questions
What does Consumer Defensive mean?
It describes companies that sell everyday necessities such as food, drinks, household goods and personal care items. Demand for these products tends to hold up better than for optional purchases when the economy slows.
Why do some companies have missing figures?
Not every measure is available for every company. When a figure such as debt or free cash flow margin is missing, the blurb says so, and you should look at the company's own financial reports before drawing conclusions.
Does a high Business Quality score mean a stock is a good investment?
No. The score only shows how a company's profitability, efficiency and debt compare with others in its industry today. It says nothing about future share prices, so use it as one input to your own research.
Keep reading
- Top 15 Consumer Defensive Stocks Right Now
- Top 15 Consumer Defensive Stocks by Marvin Opportunity Score
- Top 20 Defensive Stocks Ranked by Marvin Business Quality
- Top 15 Packaged Foods Stocks by Marvin Score
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.