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Unilever PLC ADR UL

Morningstar Rating
$50.72 −0.04 (0.08%)
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Company Report

Unilever Earnings: In-Line Results With Positive Volumes and Beauty Segment Ahead

Unilever's fourth-quarter and full-year 2023 results showed underlying sales growth of 4.7% and 7%, respectively, in line with company-compiled consensus and our estimates. In the fourth quarter, as expected, growth was propelled by volumes and price increases, with volumes up 1.8%, driven in turn by beauty's strong outperformance, up 6.3% versus 3.5% in our model, the result of higher marketing and overhead investments. Margins improved by 60 basis points during the year with the gross margin up 200 basis points and increased investments in 30 power brands (75% of sales) consuming 130 basis points, in line with its new strategy. This was highly anticipated and heavy in the second half as lower raw materials inflation enabled the group to reinvest a big chunk of gross margin gains into marketing to reinvigorate volumes. Management introduced fiscal 2024 organic growth guidance of 3%-5% versus 3.6% for consensus (prerelease), and 4% (unchanged) in our model. On profitability, Unilever expects a modest improvement for the full year, up 24 basis points in our model and lower than company-compiled consensus of 40 basis points. All in all, it was a good close to the year with fourth-quarter volumes that grew across the board except for Europe and ice cream due to higher elasticities and consumer downtrading to value formats as well as less favorable summer weather versus 2022. Core categories performed well; both beauty and wellbeing, and personal care grew volumes in Europe, despite widespread consumer downtrading across several categories, which reflected robust elasticities and brand strength. Given the in-line growth number and guidance for the full year, our fair value estimate for Unilever is unchanged at EUR 52/USD 56/GBX 4,560, with minor adjustments for currency movements. Shares are undervalued.

Price vs Fair Value

UL is trading at a 9% discount.
Price
$50.72
Fair Value
$64.00
Uncertainty
Low
1-Star Price
$91.00
5-Star Price
$23.80
Economic Moat
Yftzr
Capital Allocation
Xgtxkct

Bulls Say, Bears Say

Bulls

Unilever has always been focused on the need to reduce costs to meet the challenges of an increasingly competitive environment.

Bears

Unilever operates in some of the most competitive categories in consumer staples, where new entrants are filling niche gaps in the market and have proved to be better innovators.

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News

Trading Information

Previous Close Price
$50.76
Day Range
$50.2150.76
52-Week Range
$46.1655.99
Bid/Ask
$50.72 / $50.75
Market Cap
$126.82 Bil
Volume/Avg
2.5 Mil / 2.6 Mil

Key Statistics

Price/Earnings (Normalized)
18.25
Price/Sales
1.96
Dividend Yield (Trailing)
3.66%
Dividend Yield (Forward)
3.66%
Total Yield
4.95%

Company Profile

Unilever is a diversified personal-care (52% of 2022 sales by value), homecare (14%), and packaged food (34%) company. Its brands include Knorr soups and sauces, Hellmann's mayonnaise, Axe and Dove skin products, and the TRESemme haircare brand. The firm has been acquisitive in recent years; notable purchases include Paula’s Choice, Liquid I.V., Horlicks, Garancia, and The Vegetarian Butcher.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Core
Total Number of Employees
127,056

Competitors

Valuation

Metric
UL
PG
HEN3
Price/Earnings (Normalized)
18.2524.3323.93
Price/Book Value
6.257.671.53
Price/Sales
1.964.591.34
Price/Cash Flow
15.1819.2214.40
Price/Earnings
UL
PG
HEN3

Financial Strength

Metric
UL
PG
HEN3
Quick Ratio
0.570.400.72
Current Ratio
0.790.641.12
Interest Coverage
12.4120.6617.24
Quick Ratio
UL
PG
HEN3

Profitability

Metric
UL
PG
HEN3
Return on Assets (Normalized)
8.29%13.58%5.20%
Return on Equity (Normalized)
34.21%35.76%8.68%
Return on Invested Capital (Normalized)
13.37%20.36%7.60%
Return on Assets
UL
PG
HEN3
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