Warsaw, Poland - July, 2020: Unilever logotype on the top of office building
The Unilever share price has trailed the performance of the FTSE 100 index and its peer consumer staples stocks. While the ULVR stock has crashed by about 10%, the Vanguard Consumer Staples ETF (VDC) has fallen by just 1.2%. The Footsie has risen by about 1%. This report will assess whether Unilever is a good stock to buy.
Unilever is a giant fast-moving consumer goods (FMCG) company that sells some of the best-known products globally. It sells them in about 190 countries, and 13 of its brands generate more than 1 billion euros every year. In 2021, the company had a total turnover of over 52 billion euros, making it a strong player in key sectors.
Unilever has been left in the dust by its other global competitors. For example, it has forward revenue growth of about 3.39%. In contrast, companies like Procter & Gamble, Clorox, and Colgate-Palmolive have a growth estimate of over 5%. Its CAGR revenue growth in the past five years has been -0.10%, while its peers have had over 2% growth.
As a result, the Unilever share price has become extremely cheaper than its competitors. For example, its forward PE multiple of 18 is significantly lower than its historical average. It is also smaller than the S&p 500 and its competitors like P&G and Mondelez. As a result, activist investors like Nelson Peltz are pressing the company to make changes.
Unilever’s balance sheet is also weaker than its competitors. It has a net debt of over $28.77 billion, while the bigger P&G has just $24 billion. Its total cash per share of $2.16 is also lower than PG, which has about $4.2.
All this has happened at a time while the company continued rewarding its CEO handsomely. While the Unilever share price declined in 2021, the board boosted the CEO pay by about 42%. His pay was much lower than his predecessor’s, but the increase seems like bad judgment.
So, is Unilever stock price too cheap? It seems like a cheap stock using traditional metrics, and there are signs that it is a good turnaround story. Besides, ULVR and its peers have all gone through such winter seasons in the past.
The ULVR stock price has been attempting to make a comeback after it rose from a low of 3,269p to 3,548p. However, it has struggled moving above the 50-day moving average and is still lower than its important resistance level at 3,707p. The MACD has made a bullish crossover pattern as well.
Therefore, the bearish trend will remain until bulls manage to push the stock substantially above the 50-day and 100-day moving averages.
This post was last modified on %s = human-readable time difference 09:11