A comeback story for US Moats in November
A comeback story for US Moats in November which recovered and outpaced stocks across the US.
For the month ending 30 November 2017
The Morningstar® Wide Moat Focus Index™ (MOAT Index) bounced back in November after several underwhelming months, outpacing the broad US markets as represented by the S&P 500 Index (5.35% vs. 4.29%).
L Brands, Inc. (LB US, +31.88%) recovered in a big way throughout the month, following a difficult summer. Morningstar equity analysts pointed out recently that the company's performance metrics are trending in the right direction despite some problems with its Victoria's Secret and Bath & Body Works brands. Morningstar's fair value estimate for L Brands was adjusted down in August from $71 to $69 following weaker-than-expected near-term earnings and remains at $69 following third-quarter earnings. Consumer discretionary, led by L Brands, was the top contributing sector for the US Moat Index, followed by strong contributions by healthcare and financials companies.
Industrials was the only sector to detract from performance, driven primarily by negative performance from General Electric Co. (GE US, -9.28%). Morningstar's fair value estimate for GE was reduced in November from $29 to $26 as the company continues to grapple with a long-term restructuring effort.
This commentary is not intended as a recommendation to buy or sell any of the named securities. Holdings will vary for MOAT and MOAT Index.
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