UNLYF - Unilever: The Company Is Moving In The Right Direction
2024-03-23 22:42:59 ET
Summary
- Unilever's performance has been underwhelming compared to its peers in the consumer staples sector; however, this could change in the future.
- The company still has a high-quality product portfolio with sufficient growth prospects in emerging markets.
- Management is working on a turnaround and is shifting towards higher-margin segments and streamlining its portfolio, with a spin-off of its ice cream division planned.
- UL is no longer a typical dividend growth company, but it does pay an above-average dividend yield of 3.7%.
- Based on DCF analysis, shares are 7.3% undervalued.
Introduction
I think everyone really needs to consider adding some consumer staples to their portfolio. Consumer staples in general don’t have the nature to outperform but offer a safety cushion in uncertain times. In the dividend growth community consumer staples are also popular because of their stability and consistency. Companies in this sector are selling products that are always in demand, so their earnings are far more stable and predictable. This is also the reason that consumer staples are well presented in the list of dividend aristocrats and dividend kings. Think about companies like the Procter & Gamble Company ( PG ) , PepsiCo, Inc. ( PEP ) and the Coca-Cola Company ( KO ).
One of the most famous European consumer staple giants is Unilever PLC ( UL ). On the 4th of December I wrote an article about the company and since this moment in time the broader market is up considerably. It has to be said that the overall consumer staple sector is unpopular at the moment. Most investors are looking at technology stocks and are neglecting stocks with a more defensive nature....
Unilever: The Company Is Moving In The Right Direction