3 Numbers To Consider Before Buying Unilever plc

There are always plenty of numbers to evaluate when weighing up whether to buy a particular share.

Today I’m going to quickly review three figures for anyone thinking about investing in Unilever (LSE: ULVR) (NYSE: UL.US).

1.  16%

That is the fall in share price since Unilever peaked at 2,883p in May 2013.  The company has underperformed the market so far in 2013 with a gain of just 2.7% compared with a rise in the FTSE All-Share of 10.6%.

Underlying sales growth held up at around 5% and operating profits increased by 14% in Unilever’s recent half-year results, which suggests the underlying company isn’t in trouble and that there may be an opportunity to buy at a discount.

2. €1.3bn

Unilever managed to generate this in free cash flow in just six months (to June 2013).  It is a colossal number albeit down slightly from the €1.5bn reported during the previous year.

In fact, numbers across the board look decent for Unilever, with core earnings per share up 4% to €0.76 and the dividend yield increasing from 3.2% to 3.6% following the recent share-price drop.

This ability to generate cash is what allows Unilever to pay out those juicy dividends each quarter.

3. $750,000,000

That is the bond that Unilever offered on the US market on 4 September 2013.  It was a 2.2% fixed-rate bond with notes due on 6 March 2019.

With an annual turnover of over €50bn and net profits of over €2.7bn in the first half of 2013 alone, you would imagine Unilever had no need to borrow more. 

Yet net debt has risen from $7.4bn at 31 December 2012 to the $11.6bn reported at 30 June 2013 — although the main reason for this rise was the voluntary open offer needed to acquire additional shares in Hindustan Unilever Limited. 

Still, a borrowing rate of 2.2% is hard to turn down, though, and the company should be confident of being able to invest the proceeds and easily outstrip the finance costs.

What next?

So there you go, three numbers that may or may not have some bearing on whether you buy shares in Unilever.

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> Barry does not own any share mentioned in this article. The Motley Fool has recommended shares in Unilever.