Eyes Down For Unilever plc Results

Prudent management should see Unilever plc (LON: ULVR) knocking out some decent first-half results.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

UnileverGood start to 2014“, that’s how the first-quarter headline went for Unilever (LSE: ULVR) (NYSE: UL.US) in April, and shareholders will be expecting more of the same from the next installment on 24 July when we learn what’s happened over the past six months.

Q1 brought sales growth of 3.6%, once negative currency conversion affects were accounted for. And as if to emphasise the global reach of Unilever’s 200 or so household brands, the firm reported a 6.6% rise in underlying sales in emerging markets.

Sensible targets

Chief executive Paul Polman said at the time that “We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow” — and though those might sound like obvious priorities for any company, it’s surprising how many don’t seem to see it that way.

The only cloud in an otherwise sunny report was the concern that “Unilever is involved in a number of ongoing investigations by national competition authorities“, but that doesn’t seem to have caused any real alarm.

The City’s analysts are expecting a flat year for earnings to December 2014, and that fits in with the balance between rising sales and adverse currency movements. There’s a more optimistic outlook on the cards for 2015, with a 9% rise in earnings per share currently predicted.

Steady dividends

For both years we should see comfortable dividend rises, to yield 3.4% this year and 3.7% next.

In financial terms, Unilever’s first-half report should be a “steady as she goes” thing, but the firm has had one bit of bad news this week — it’s lost the head of its Personal Care division, Dave Lewis, who is off to take over the reins at Tesco from outgoing boss Philip Clarke.

If you’d bought Unilever shares five years ago, you’d be sitting on an 80% gain, compared to the FTSE’s 50%. And you’d have enjoyed dividends that were a little better than average. But the price overheated a bit in early 2013, and it’s fallen 8% since then to today’s 2,644p. Does that make the shares cheap?

No bargain here

I don’t think it does, because we’re still looking at a forward P/E of 20, and that’s a bit high even by Unilever’s standards — though its solid management does justify something higher than the FTSE 100’s long-term average of 14.

Right now, I think the price is high enough — and the analysts agree, putting out an overwhelming Hold consensus.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool owns shares of Unilever.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »