US Consumer Staples: Here We Go Again; C3Q26 Staples Earnings Preview

Heading into C3Q results we think the fundamental backdrop is well understood in that demand, while showing modest signs of stabilization/improvement, remains below historical levels and input cost inflation is likely to limit meaningful upside on the bottom line. Although concerns on '27 earnings power remain in focus, our general sense is that most companies are unlikely to provide incremental updates at this stage as the operating environment could be very different several months from now. As has been the case for the better part of the last year and a half, there are very few names in the group where investors have comfort on the top and bottom line trajectory, and with this dynamic increasingly priced in, risk/reward has been harder to handicap. While relative valuation calls remain difficult, we do think there has been dislocation in certain pockets where growth has not materially shifted, and think the upside/downside skew is too attractive to ignore, which is why we have upgra