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Unilever PLC ADR UL

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Morningstar’s Analysis

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Strong Third Quarter for Unilever Shows Resilience of Business During Coronavirus

Analyst Note

| Philip Gorham, CFA, FRM |

Unilever's solid performance in 2020 continued in the third quarter, with underlying sales growth of 4.4%, which is a full percentage point above our medium-term growth estimate. We are tweaking our near-term estimates to reflect a strengthening currency headwind, but this has no impact on our EUR 50 fair value estimate of the Amsterdam-traded share class or our wide economic moat rating. It reported a solid first-half 2020, all things considered, with flat sales and impressive margin expansion. We are making minor alterations to our forecasts but reiterate our EUR 50 fair value estimate for the Amsterdam-traded share class and wide moat rating. Unilever is now trading at our fair value estimate, and we see greater value in other categories such as brewing and tobacco. Having said that, the company owns a number of brands that have benefitted from the changes in consumer behaviour during the coronavirus pandemic, and the stock has been relatively defensive this year. Investors fearful of a second wave may regard Unilever as being a relatively safe haven over the next 12 months.

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Company Profile

Business Description

Netherlands-based Unilever NV and U.K.-based Unilever PLC operate Unilever Group, a diversified household and personal product (60% of 2018 sales by value) and packaged-food and refreshments (40%) company. The firm's brands include Knorr soups and sauces, Hellmann's mayonnaise, Lipton teas, Axe and Dove skin products, and the TRESemme hair-care brand. The firm has been acquisitive in recent years, and high-profile purchases include the mail-order men's grooming business Dollar Shave Club.

100 Victoria Embankment
London, EC4Y 0DY, United Kingdom
T +44 2078225252
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2010
Fiscal Year End Dec 31, 2020
Stock Type
Employees 150,000