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Reckitt Benckiser Group PLC ADR RBGLY

Morningstar Rating
$12.89 −1.99 (13.37%)
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Company Report

Reckitt Earnings: Slew of Bad News Sends Stock Down More Than 10%; Shares Cheap

We are reducing our fair value estimate for wide-moat Reckitt by 3% to GBX 6,700/$17.10 for the ADR following disappointing results for fourth-quarter 2023 and a more negative-than-expected 2024 outlook. Management has guided for like-for-like revenue growth of 2%-4% for 2024. Although this is in line with company-compiled consensus of 2.9% organic revenue growth, it does have a different composition, with the nutrition segment expected to post a high-single-digit revenue decline and mid-single-digit growth for the other two segments, health and hygiene. This would require the health and hygiene segments to post higher-than-expected growth to compensate for the nutrition downside. This scenario is harder to fathom at this time given relatively weak volume momentum going into 2024 and lower pricing in the context of moderating input cost inflation.

Price vs Fair Value

RBGLY is trading within a range we consider fairly valued.
Price
$12.89
Fair Value
$32.40
Uncertainty
Medium
1-Star Price
$39.99
5-Star Price
$57.81
Economic Moat
Qwrv
Capital Allocation
Qqcnsqpy

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
$14.88
Day Range
$12.8513.18
52-Week Range
$12.8516.60
Bid/Ask
$12.86 / $12.99
Market Cap
$45.89 Bil
Volume/Avg
1.5 Mil / 564,959

Key Statistics

Price/Earnings (Normalized)
15.04
Price/Sales
2.55
Dividend Yield (Trailing)
3.59%
Dividend Yield (Forward)
3.59%
Total Yield
4.02%

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
RBGLY
BAYRY
PG
Price/Earnings (Normalized)
15.044.8925.02
Price/Book Value
4.280.867.89
Price/Sales
2.550.604.72
Price/Cash Flow
13.774.3119.76
Price/Earnings
RBGLY
BAYRY
PG

Financial Strength

Metric
RBGLY
BAYRY
PG
Quick Ratio
0.350.710.40
Current Ratio
0.541.130.64
Interest Coverage
11.88−0.5420.66
Quick Ratio
RBGLY
BAYRY
PG

Profitability

Metric
RBGLY
BAYRY
PG
Return on Assets (Normalized)
8.53%4.67%13.58%
Return on Equity (Normalized)
26.40%15.15%35.76%
Return on Invested Capital (Normalized)
14.13%8.37%20.36%
Return on Assets
RBGLY
BAYRY
PG
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