The 2026 Global Underperformers
A Jenga IP annual study
At the start of every year, I examine a global list of companies that underperformed in share price in the trailing years (more than -30% in the past year, -40% in the past 2 years, -50% in the past 3 years and -60% in the past 4 years), alongside some profitability hurdles. We call this the Global Underperformers study, and the purpose of it is twofold.
First, by examining the list, one gains some perspective of regions, industries and themes within markets where investors are bearish, and as is typical, some of these could be areas of overly pessimism, leading to long-term opportunities for a patient and long-term investor. We find the exercise to be a good way of “checking the temperature” of markets.
Second, from a more direct standpoint, the universe of companies, and those we shortlist at Jenga IP, could be an idea generation source for potentially undervalued long-term investments.
Although still a short time frame, the equally-weighted portfolio of the 20 companies shortlisted from our 2025 Global Underperformers study returned +27%, outperforming the S&P 500 and the MSCI World index. You can read last year’s edition here.
The study screen
As a starting point, it’s vital to share the screen filter applied to the study so you can see how we reached our conclusions of the universe. These consist of:
The share price performance declined by -30% in 2025, -40% between 2024 and 2025, -50% between 2023 and 2025, and -60% between 2022 and 2025.
A minimum market capitalisation of $1 billion.
Must have had a positive EBIT margin in any of the last 3 calendar years.
A minimum return on capital of at least 6% in any of the last 3 calendar years.
** Note: Banks and REITs aren’t included in the underperformers study.
Of the 9,312 companies with a market cap above $1 billion, 606 companies (6.5% of companies) met the screen parameters, slightly smaller than last year’s 7% average, reflecting the fact that 2025 was generally favourable for global equities, leading to fewer underperformers.
For the report, I will first highlight how each of the 11 industries (GICS) performed from a contribution to underperformance, discuss the drivers of underperformance in each industry and then share our analysis and perspectives on what we are watching from a recovery lens. Next, we’ll summarise the investment case of the 20 shortlisted companies, selected from scanning all industries and then share a short note on the deep underperformers, that is, companies that declined by more than 80%, the 80% drawdown, during the study period.
The 2026 underperformers table
As presented in the table above, 5 of the 11 industries (highlighted in green) underperformed relative to their share of the global listed market, meaning they had more companies as a share, in the underperformers list than their share of all globally listed companies.
Underperformers by industry:
Consumer staples
Consumer discretionary
Healthcare
Information technology
Communication services
Next, we’ll review the key contributors to each of the 11 industries.
Industry overview
Consumer staples (75 companies)
Consumer staples were the worst performing of all 11 industries for 2025 and was the only industry to have twice as big a representation of underperformers (12.4%) versus its share of listed companies (6.2%), highlighting how severe its underperformance was. The 75 companies were broadly concentrated in three sub-industries and themes:
Alcoholic beverages: For the second year in a row, alcoholic beverages contributed to the consumer staples underperformance, but this year, the underperformance was with even greater concentration. A quarter of all consumer staples underperformers were alcoholic beverage companies (18 of 75 companies), including several names within the beer and brewers category that initially seemed resilient to current industry shifts, with less Gen Z and millennials drinking.
American staples: Last year, the staples underperformance story was China. This year, while more geographically diversified, the U.S. was the most notable contributor, diversified across its retailers, packaged foods and cosmetics brands.
Packaged foods: Once an indestructible staples category, the packaged foods sub-segment downturn was well pronounced in 2025, ranging from U.S. mid-cap franchises like Campbell’s Company and Canagra Brands, the Philippines groups like Universal Robina and Monde Nissin and Chinese food and nut players like ChaCha Food and Three Squirrels.
Jenga IP Consumer Staples Perspective (Diageo and Unicharm)
For the second year in a row, the alcoholic beverage industry features on the 20-company list, but this time, we are selecting Diageo (UK) as the preferred recovery name, given its more actionable turnaround plan and recovery process.
There are some previously expensive high quality consumer staples now on sale, and here, we select Japan’s Unicharm, an increasingly global wellness, baby and pet care manufacturer.
While not on our shortlist, Indonesia’s PT Sumber, a grocery chain in the duopolistic domestic grocery market, is one to watch.
Consumer Discretionary (108 companies)
Similar to staples, the consumer discretionary space underperformance was also more pronounced this year, with its share increasing from 13.4% to 17.8% this year.
Hotels, restaurants and leisure: There was a sizeable higher representation of the hotel and restaurant space, accounting for nearly a quarter of all discretionary underperformers. They ranged from previously highly priced quality franchises like Chipotle (56x P/E), Oriental Land (51x P/E) and Americana Restaurants (34x P/E) to domestic leaders that failed to meet market growth estimates, such as Greggs and Trainline (UK) and Talabat (UAE).
Apparel and luxury: Compared to last year, the sub-industry was more apparel and less luxury in 2025, with U.S sports apparel franchises and Indian brands being key contributors. For years, the Indian companies had enjoyed excessively high multiples, and 2025 brought some reality check to valuations; Relaxo Footwear (35% share decline), Vedant Fashions (55% share decline) and Bata India (31% share decline). On average, these companies still trade in excess of 50x P/E.
Distribution and retail: While distribution and retail have historically been a more stable segment of consumer discretionary, the year saw the sub-industry contribute the most to the industry’s underperformers. While broad in scope, the U.S. home furnishing-related retailers were the key contributors, including companies like Pool Corp, Floor & Decor, RH and Unbound Group, experiencing sharp drawdowns during the year.
Jenga IP Consumer Discretionary Perspective (Lululemon, B&M and Choice Hotels)
We noticed more dispersion in the sports apparel industry, impacting previously high growth segments like footwear and athleisure. While it’s likely some brands will fail here, Lululemon Athletica has a clearer recovery path, and we select them as our first pick.
Investors sold off several once market darlings British names (Greggs, Trainline and B&M European). With valuations now too low to ignore, B&M European Value should withstand further macroeconomic shocks.
The restaurant and hotel industry was a new entry to the underperformers list, and here, Choice Hotels brings a mix of quality and value, joining the shortlist.
Information technology (90 companies)
The year was favourable for IT hardware but challenging for semiconductors, more specifically, solar companies after reeling with another year of overcapacity, and too many PV manufacturers. Nearly half of all semiconductors underperformers were solar companies.
In software, there was a concentration of underperformers in businesses within the supply chain, logistics and industrial applications; SPS Commerce (U.S., 51% share decline), WiseTech Global (Australia, 43% share decline) and Manhattan Associates (U.S., 36% share decline). Initially seen as resilient from the downturn after the pandemic boom, the industry cut in operating expenses and Capex is now directly impacting the software companies.
Another key trend was the increasing risk of AI to existing business models, particularly consulting (Globant, Elm Company, EPAM Systems), advisory (Gartner) and website creation and design companies (Wix.com, GoDaddy and Adobe), as all sold off strongly during the year. While some will undoubtedly lose some business from AI, others might be further enabled, and it would be essential to differentiate between both when sizing an investment case.
Jenga IP Information Technology Perspective (Vitec Software, Gartner and Shenzhen Transsion)
Serial acquirers also featured on the list, although at a small scale. Among them, Vitec Software’s range of applications, a mission-critical and recurring business model, should provide some resilience during the current downturn, and joins our 20-company list.
While not as sticky as pure software, the advisory businesses should be more resilient than pure IT consulting, and here, Gartner is our top pick, with its earnings multiple trading at its lowest levels since 2009.
Although IT hardware performed well, we see value in Shenzhen Transsion, the low-cost mobile phone manufacturer behind brands like TECNO and Infinix.
Communication Services (27 companies)
Historically, classified ads rarely showed up on the underperformers list given their naturally high and stable margins but this year, the AI-induced industry downturn caused a reality check on the once impenetrable sub-industry, with domestic leaders like Hemnet (Sweden, 49% share decline) and Baltic Classifieds Group (Lithuania, 36% share decline) experiencing their steepest drawdowns after being assigned lofty valuations from markets.
In telecommunications, from a business model lens, there was a broad range of companies, from Iridium Communications, an American alternative carrier focused on remote locations, to PT SMN, an Indonesian tower and fibre optic operator. There were no clear trends in telecoms, and the declines here seemed more company-specific than broader themes.
In media and entertainment (15 companies), similar to telecommunications, there were also no clear trends, with the underperformers quite broad in scope. For example, the five largest underperformers by market cap, Charter Communications (broadband connectivity), Trade Desk (advertising platform), Sirius XM (audio entertainment), WPP (creative solutions) and NCSOFT (gaming), are each very different companies.
Jenga IP Communication Services Perspective (Hemnet)
Communication services are fairly stable, and underperformers are companies in direct competition with big tech and AI companies. It’s important to carefully understand the risks and challenges involved when selecting potential turnarounds and recovery names.
In our view, Hemnet, a market leader in Sweden’s real estate marketplace industry, while directly impacted by the industry’s downturn, should prove resilient given its dominance, strong economics and growth potential.
Financials (27 companies)
The payments industry was the key contributor to the financial underperformers, featuring companies that made headlines like Fiserv (USA) and Edenred (France). While there was some recovery in the emerging market payment companies (DLocal and PagSeguro), their steep decline in prior years kept them on the list as they still need to appreciate by over 100% to make up for past share price losses.
Beyond payments, three other sub-industries and themes were key contributors to the list of underperformers. First, the financial market data providers (CRISIL, Morningstar and FactSet) had each enjoyed years of lofty valuations and similar to the AI risk shock seen in other industries, it served as a reality check to their valuations as their shares declined by 30 to 40% on average.
Second, to our surprise, was a selective group of European private equity companies (CVC, Antin Infrastructure Partners and Bure Equity). It’s unclear to us what caused the declines relative to their American counterparts, and we believe this is something worth noting.
The third key theme contributing to the financial underperformers list was the Saudi Arabian Insurance companies, particularly their market leaders, Bupa Arabia and Al Rajhi. After years of posting strong industry growth, the Saudi insurance industry published a 35% decline in profits, led by medical and motor insurance categories.
Jenga IP Financials Perspective (FactSet and Bupa Arabia)
In financials, our preference remains quality and resilience over pure value upside, and here, FactSet, the fifth-largest financial market data platform, should remain resilient in the face of its existing AI challenges.
While admittedly still early in its downturn, the Saudi Arabian insurance industry should prove resilient in the long term, and here, we see Bupa Arabia as a favourable long-term company for the shortlist.
Industrials (99 companies)
We observed very similar trends across the Industrials space as with last year; the presence of several renewables and lithium companies (Voltronic Power and Arctic Solar), American building product companies exposed to the housing downturn (Boise Cascade and Trex) and the professional services companies, particularly HR and employment services categories (Randstad, Adecco and TriNet).
The key difference between the two years is that in 2025, the underperformers spread further to the high quality businesses that had enjoyed premium multiples. For example, we had Paycom Software in HR SaaS, BLS International in the passport and visa support solutions, Copart in vehicle parts auction, and Wolters Kluwer and CBIZ in tax and accounting solutions. Each of these five companies are ones to watch.
The year was another challenging year for transportation, particularly logistics companies such as Air China Cargo, Kuehne + Nagel (Switzerland), SAL Saudi Logistics and RXO (U.S.). While volumes remain strong, each face challenging unit pricing compression, thus affecting margins.
In the largest sub-industry, capital goods (chart above), the key contributors were the energy solutions (battery, inverters and other solutions) and building products. For energy solutions, a category dominated by Chinese companies, 2025 turned out to be a good year for most (Ningbo Ronbay, China, +67% share gain; Zhejiang HangKe, China, +64% share gain); however, drawdowns from past years kept many of them still 50% lower than their share price from years ago.
For building product companies, particularly in the U.S., as the market had anticipated, 2025 was the year the housing slowdown was reflected in earnings, with many seeing their operating profits cut by more than half in the 9 months of 2025.
Jenga IP Industrials Perspective (NIBE, InPost and BLS)
Although we remain wary of the building products and energy solutions cycle, a third of the industrial underperformers and in its second year of decline means it’s too big to ignore. In its latest quarter, NIBE Industrier reported seeing signs of some recovery, and we selected it as our capital goods exposure for the shortlist.
In transportation, our bias is towards companies with clear growth drivers and less exposure to the cycle, and here, InPost, the Polish leader in postal lockers, is the shortlist pick.
In the industrial services sub-sector, we are leaning towards quality companies, and here, BLS International, the Indian listed and 3rd largest provider of passport and visa services, could win further share from its larger peers. While not on the 20 company shortlist, we also note Wolters Kluwer.
Materials (58 companies)
Chemicals. The key theme for the 2025 materials industry’s underperformance.
As shown in the chart above, the chemicals sub-sector represented 67% of all materials underperformers, while being 42% of all listed materials companies. Within materials, it was clear all sub-industries suffered, from the Chlor Alkali producers (Olin), petrochemicals (Petronas, Braskem, Alpek and Sahara International Petrochemical) and other large diversified players (Dow, and Westlake). The chemical industry is broadly reeling from overcapacity, Chinese import substitution and an overall poor economic profile.
In metals and mining, given the strength in gold and silver prices, its underperformers were in more industrial materials, particularly iron ore and coal businesses, in line with their weaker commodity prices for 2025. The construction materials companies began seeing the impact of the housing downturn, and here, the largest by market cap on the list, James Hardie, reported an earnings drop, reflecting the broader slowdown.
Jenga IP Materials Perspective (Symrise and Kumba Iron Ore)
In our view, it’s still very early to call a recovery in the chemicals industry, and we broadly remain bearish on the industry, especially among the large and mid-caps. While we see potential growth among the Indian chemical companies like Deepak Nitrite, leader in chemical products like Xylidines, Cumidines and Oximes, at 20x its peak earnings achieved in FY 2022, we still see room for further declines, but will closely monitor its developments.
In the specialty chemical sub-segment, we select Symrise, a supplier of fragrance, baby and pet food ingredients with an 11% share of the global market.
In metals and mining, for the second year in a row, Kumba Iron Ore joins the 20-company shortlist, supported by the H2 2025 recovery in iron ore prices.
Energy (28 companies) and Utilities (4 companies)
The crude oil price decline from $71 to $61 per barrel (WTI) mainly impacted the industry’s Capex - the drillers and equipment companies, and also the smaller exploration and production companies, in line with trends seen during past downturns. From a regional focus, the oil drillers were mixed by region and application. For example, Noble Corporation (U.S., 10% share decline) is focused on offshore deepwater projects in Guyana, Brazil and the Gulf of Mexico, while Patterson-UTI Energy (U.S., 26% share decline) focuses on U.S. gas-heavy projects and the Permian Basin.
In the exploration and production category, the segment was dominated by the “newer breed” of mid and small-cap American energy companies. With their share prices down by over 40%, it seems M&A is picking up among them. Towards the end of last year, Civitas Resources (41% share decline) and SM Energy (52% share decline) announced their merger of equals.
Jenga IP Energy and Utilities Perspectives (Cmb.Tech)
In line with our last year views, we remain cautious on oil and gas producers and while last year’s pick, Neste, remains in the universe despite its gain, we opt for Cmb.Tech (previously called Euronav), a Belgian vessel fleet operator with over 150 vessels in the oil tankers, chemical, and dry bulk, among other categories.
We expect further M&A activity in the U.S oil and gas small and mid-cap space and will carefully watch its aftermath.
Healthcare (85 companies)
While there were some improvements, the healthcare industry continues to reel from the pandemic boom and for 2025, it remained an underperforming industry, representing 14% of all underperformers, while being 9% of listed markets.
The indestructibles - healthcare companies immune to cyclical shocks.
For years, these companies did seem indestructible, but 2025 was the year that truly tested them. The “indestructibles” underperformers included the likes of Novo Nordisk (diabetes and weight loss products, 48% share decline), Coloplast (intimate care supplies, 31% share decline), Zhangzhou Pientzehuang (traditional medicine, 21% share decline), Molina & United Healthcare (U.S. managed health care service, 35% and 40% share decline, respectively).
Looking closer to the split by healthcare sub-industry, as shown in the chart above, the underperformers were pretty balanced, with every 5 categories within +/- 5% of their listings’ weightings. Examining across the sub-industries, it was clear that the vaccine and Covid-19 beneficiaries remained out of favour in both share price and fundamentals (BioNTech, Pfizer, Illumina, Moderna and Chongqing), with several at share prices below their 2020 levels.
Jenga IP Healthcare Perspective (Novo Nordisk, Molina and Autek China)
Although the missteps Novo Nordisk made in the U.S. weight loss market are well publicised, we still see potential for some recovery relative to the market leader.
The U.S. managed care industry is reeling from elevated medical utilisation, impacting its pricing and profitability. Repricing in 2026 could serve as a catalyst for the future, and here, Molina Healthcare is our preferred pick.
Since the bubble burst among the Chinese quality healthcare, pharmaceuticals, and medical supplies sub-industries, some companies are at more realistic valuations. One is Autek China, a growing player in the contact lenses and eye care industry. The improved regulatory climate also supports its investment case.
The 80% drawdown
28 of 606 companies declined by more than 80% during one of the four years screening period, with information technology (5 companies), consumer discretionary (5 companies), and healthcare (4 companies) making up a bulk of these companies. Admittedly, for most companies, the market had fundamentally misjudged the resilience and growth prospects for them; Remy Cointreau, currently in a 82% 4-year drawdown, was valued at 80x P/E, Domino’s Pizza Australia, a pizza chain in a 81% 4-year drawdown, had also peaked at 75x P/E.
While none of the 28 companies made the 20-company shortlist, we reflag Teleperformance, the French BPO company, in an 84% drawdown, currently priced by the market at 5x forward earnings as a potential takeover candidate.
The 20 company Jenga IP shortlist
Final thoughts
On average, the 20 shortlisted companies are valued by the market at 15x forward P/E, far from cheap as you might expect from companies going through cyclical troughs. As we have learned from past studies, the “cheapest” doesn’t necessarily reflect the best value, and it’s essential to merge the share price declines and valuations with factors that impact the company, ranging from barriers to entry, test of time, pricing power and market growth, as these all affect their ability to withstand the cyclical shocks.
For disclosure, we are only invested in one of these 20 companies (FactSet), and we expect to spend the next few months further researching some of these companies.