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Reckitt Benckiser Group PLC ADR RBGLY

Morningstar Rating
$14.82 +0.11 (0.75%)
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Company Report

Wide-Moat Reckitt Demonstrates Solid Pricing Power, but Is Not Immune To Cost-of-Living Crisis

Reckitt’s portfolio is well positioned in categories that benefit from secular growth drivers across consumer health and hygiene, which should translate into growth ahead of its peer group in the midterm. The acquisition of Mead Johnson has added to its portfolio a leadership position in infant nutrition—a segment with pricing power and generally sound margins. However, the timing of the transaction, ahead of a period of declining birthrates and intensified competition in China, posed significant challenges and has dampened revenue growth in the last few years. Management sold the infant nutrition business in China in 2021, and the future of the remaining core infant nutrition business remains uncertain. While we believe the segment’s reduced size presents an opportunity for management to refocus on faster-growing businesses—positioning them for longer-term success past the peaks in demand generated by the coronavirus pandemic—further secular declines in birthrates in the U.S. could continue to be a drag to the company’s mid-single-digit growth ambitions. Nonetheless, we expect the worst is behind the company.

Price vs Fair Value

RBGLY is trading at a 17% discount.
Price
$14.82
Fair Value
$68.50
Uncertainty
Medium
1-Star Price
$86.36
5-Star Price
$33.67
Economic Moat
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Capital Allocation
Gdhjckfb

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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Trading Information

Previous Close Price
$14.71
Day Range
$14.6714.82
52-Week Range
$13.1116.60
Bid/Ask
$14.65 / $14.84
Market Cap
$52.78 Bil
Volume/Avg
166,719 / 507,608

Key Statistics

Price/Earnings (Normalized)
16.79
Price/Sales
2.86
Dividend Yield (Trailing)
3.12%
Dividend Yield (Forward)
3.12%
Total Yield
3.12%

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)
16.794.8124.33
Price/Book Value
4.460.857.67
Price/Sales
2.860.594.59
Price/Cash Flow
15.224.2419.22
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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