London-based Unilever PLC (UL) is a leading global supplier of beauty and personal care, housekeeping, food and refreshment products, with sales in more than 190 countries and products used by 2.5 billion people each day. The company recorded underlying revenue growth of 2.5% for the third quarter, ended September 30, 2021. In addition, its revenue increased by 4%, of which 1.6% of acquisitions, net of disposals. The stock has gained 1.6% in progress over the past month.
UL’s annual dividend payment of $ 2.03 over the last 12 months translates into a return of 3.79%, compared to the industry average of 2.14%. This compares to its average dividend yield of 3.23% over four years. Its dividend payouts have grown at a CAGR of 7.7% over the past five years.
The operational excellence of the company continues to drive its growth. In addition, strong revenue growth, driven by improvements in all business segments, should further boost the overall performance of the company.
Here is what could shape UL’s performance in the short term:
In August, Unilever launched its Positive Beauty Growth Platform, an initiative designed to collaborate with scale-ups and startups to drive innovation and brand growth. Unilever’s Beauty and Personal Care division, which includes global brands Dove, AX, and Love Beauty & Planet, and The Unilever Foundry, the company’s collaborative innovation network, lead the beauty growth platform positive. To date, the foundry has tested over 400 startup projects, including partnerships with the AI-powered HelloAva skin care engine and the Helpling cleaning services marketplace.
Also in August, Unilever announced that its ice cream factory in TaiCang, China, joined the World Economic Forum’s Lighthouse Network, a community of manufacturing sites. Lighthouse sites embrace and use technology from the Fourth Industrial Revolution to change business operations through innovation, sustainable practices and increased efficiency. The TaiCang plant is the third Unilever plant to achieve this designation.
20.3% of last 12 months of UL EBITDA margin is 48.1% above the industry average of 13.7%. In addition, its respective ROC, Net Profit Margin and ROA are 77.8%, 100.3% and 67.2% above industry averages. In addition, its $ 10.17 billion in operating cash flow is 1,833.2% higher than the industry average of $ 526 million.
POWR Ratings Reflect Strong Outlook
UL has an overall rating of B, which equates to a purchase rating in our property POWR odds system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight distinct categories. UL has a B rating for stability, which is warranted given the action’s beta of 0.16.
Of the 68 actions of Consumer goods industry, UL is rated No. 11.
Beyond what is stated above, we have rated UL for growth, quality, value, sentiment and momentum. Get all UL ratings here.
UL’s strategic choices and emphasis on operational excellence have boosted its performance over the past few years despite difficult market conditions. In addition, it should benefit from a solid recovery in demand in its priority markets of the United States, India and China. So, given the company’s strong profitability and its remarkable dividend history, we believe the stock could be a great addition to its dividend portfolio.
How does Unilever PLC (UL) compare to its peers?
UL has an overall rating of B in our proprietary rating system. This rating is higher than that of its peers, YAMAHA Corporation (YAMCY), Groupe Franchise Inc. (RFA) and Puma SE (PUMSY), which have a C (Neutral) rating.
UL shares were trading at $ 53.57 per share on Thursday morning, down $ 0.05 (-0.09%). Year-to-date, UL is down -8.02%, compared to a 29.55% increase in the benchmark S&P 500 over the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. Following…