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Reckitt Benckiser Group PLC RKT

Morningstar Rating
GBX 4,512.00 +74.00 (1.67%)
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Company Report

Reckitt: Shares Deep in the Red After US Jury Orders Compensation in Baby Formula Lawsuit

Wide-moat Reckitt’s shares fell more than 15% in intraday trading March 15 after an Illinois jury ordered subsidiary Mead Johnson to pay $60 million in compensation to a mother whose premature baby died from necrotizing enterocolitis complications linked to consumption of the company's Enfamil infant formula. NEC is an intestinal inflammatory disease that primarily affects premature infants and can lead to death in advanced cases. According to Reuters, this trial is just the first out of potentially hundreds of similar lawsuits brought against Reckitt and Abbott, which produces Similac infant formula. This raises concerns that the total compensation that the company will be mandated to pay could end up substantially higher.

Price vs Fair Value

RKT is trading within a range we consider fairly valued.
Price
GBX 4,296.00
Fair Value
GBX 8,643.00
Uncertainty
Medium
1-Star Price
GBX 1,467.00
5-Star Price
GBX 8,516.00
Economic Moat
Wczb
Capital Allocation
Zgybkzq

Bulls Say, Bears Say

Bulls

Reckitt’s portfolio is well positioned in categories with long-term structural growth potential.

Bears

The core infant nutrition segment will continue to dampen Reckitt’s growth potential given depressed birthrates in the U.S. Participation in the WIC program is increasingly expensive and potential contract losses could strongly affect revenue.

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News

Trading Information

Previous Close Price
GBX 4,438.00
Day Range
GBX 4,458.004,543.00
52-Week Range
GBX 4,190.006,570.00
Bid/Ask
GBX 4,320.00 / GBX 6,500.00
Market Cap
GBX 3.20 Tril
Volume/Avg
3.7 Mil / 2.8 Mil

Key Statistics

Price/Earnings (Normalized)
12.21
Price/Sales
2.22
Dividend Yield (Trailing)
4.14%
Dividend Yield (Forward)
4.14%
Total Yield
4.72%

Company Profile

Reckitt Benckiser was formed in 1999 through the merger of the British firm Reckitt & Colman and Dutch-based Benckiser. Recently rebranded under the corporate name Reckitt, it sells a portfolio that includes a variety of household and consumer health brands, such as Lysol, Finish, Durex, and Mucinex, many of which hold the number-one or -two positions in their categories globally. Reckitt has repositioned its portfolio and has entered the infant formula market through the acquisition of Mead Johnson in 2017, expanded its consumer health presence by acquiring Schiff Nutrition, K-Y, and Biofreeze, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 35% of sales from emerging markets.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Core
Total Number of Employees
20,071

Competitors

Valuation

Metric
RKT
PG
UL
Price/Earnings (Normalized)
12.2125.3617.20
Price/Book Value
3.818.006.27
Price/Sales
2.224.781.97
Price/Cash Flow
11.9920.0315.23
Price/Earnings
RKT
PG
UL

Financial Strength

Metric
RKT
PG
UL
Quick Ratio
0.350.400.51
Current Ratio
0.540.640.76
Interest Coverage
11.8820.669.28
Quick Ratio
RKT
PG
UL

Profitability

Metric
RKT
PG
UL
Return on Assets (Normalized)
8.53%13.58%8.54%
Return on Equity (Normalized)
26.40%35.76%35.06%
Return on Invested Capital (Normalized)
14.13%20.36%13.94%
Return on Assets
RKT
PG
UL
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