Defensive Company

DEFINITION of 'Defensive Company'

A corporation whose sales and earnings remain relatively stable during both economic upturns and downturns. Defensive companies may lag behind other companies during periods of economic expansion due to the relative stability of the demand for its products and services. While the demand for some goods and services tends to decrease dramatically during periods of economic instability or turmoil, the demand for the goods and services provided by defensive companies tends to remain stable.

BREAKING DOWN 'Defensive Company'

Companies within the utilities industry, such as water and electricity corporations, are examples of defensive companies because the demand for these goods and services does not soften along with a declining economy. Other companies include those involved in the manufacturing or distribution of food, tobacco and oil.