Unilever Share Price: Is This Consumer Staples Giant A Buy?

Unilever PLC is a multinational consumer goods company that has become a household name worldwide. With over 400 brands spanning food and beverages, personal care, and home care products, Unilever touches the lives of billions of consumers globally each day. 

But is Unilever stock a good investment opportunity right now?

In this detailed analysis, we’ll look closer at Unilever’s business fundamentals and financial performance to determine if Unilever shares are a buy at the current price.

Overview of Unilever PLC

Image retrieved from Unilever’s webpage: www.unilever.com

Unilever PLC, whose headquarters are in London, United Kingdom, is dual-listed on the London Stock Exchange and Euronext Amsterdam. Its most recognizable brands include Dove, Ben & Jerry’s, Lipton, Hellmann’s, OMO, Lux, Sunsilk, Axe, Rexona, Surf, and Vaseline.

The company operates through three main divisions:

Beauty & Personal care: Personal care, skin care, hair care, deodorants, oral care, and skin cleansing products. This is Unilever’s largest division, accounting for about 40% of sales.

Foods & Refreshments: Savory, dressings, tea-based beverages, ice cream, soups, and more.

Home care: Home and hygiene products, including laundry, surface care, dishwashing, and air and water purification systems. 

Why is Unilever a Good Investment?

Quality defensive names like Unilever deserve a closer look in an increasingly volatile stock market driven by recessionary fears. Beyond its steady operational results, here are some of the reasons UL stock warrants consideration:

Resilient top-line growth: Despite battling foreign currency headwinds and elevated costs, Unilever grew its sales year-over-year in Q3 2022. This reflects consistent volume-driven growth aided by strategic pricing actions across its product portfolio. 

Expanding margins: Unilever has consistently expanded its profit margins by driving premiumization and operating efficiency. The company’s commitment to offering high-quality products and services and optimizing its operations has enabled it to grow steadily.

Strong cash generation: Over the last 12 months, Unilever produced €5.2 billion in free cash flow. This gives the company the financial capacity to sustain its dividend payout and pursue additional growth drivers.

Resumption of buybacks: After a brief pause to build balance sheet flexibility this year, Unilever announced plans to resume €3 billion worth of share repurchases over the following years. Buybacks will boost shareholder returns alongside the company’s well-covered dividend yield.

How Much Are My Unilever Shares Worth?

The Unilever share price has faced volatility over the past year but still shows long-term growth potential. After ending 2022 at 4,182p, the Unilever share price pulled back in early 2023 as broad market weakness and global growth concerns weighed on consumer staples stocks. From the 2022 close, UL shares dropped 1.8% in January and remained range bound in February.

But by March, Unilever’s defensive attributes and solid operating results returned investors’ appetites. The Unilever share price regained momentum, climbing over 4,190p for a monthly gain of 2.7%. 

Growth accelerated in April, fueled by strong Q1 earnings results, which showed Unilever gaining market share across crucial divisions. The Unilever share price surged another 5.9% month-over-month to reach 2023 highs above 4,436p.

Hitting resistance, profit-taking ensued in May, with the Unilever share price giving back 8.9% to fall near the 4,000p level. But the pullback proved short-lived as investors again favored defensive stocks amid summer market volatility. After rebounding 1.7% in June, the Unilever share price climbed another 2.8% in July to return above 4,190p.

Shares retreated from those levels in the back half of 2023, pressured by a stronger British Pound, imported cost inflation, and October’s surprise profit warning from a critical European peer. 

After single-digit percentage pullbacks in August and September, the Unilever share price plunged 11% in October below 3,900p. While still profitable and less directly exposed than its peers, concerns over regional consumer spending rippled through the sector.

Unilever stock continued declining over the next two months, accelerating to another 3% drop in November and a sub-1% December dip. Heading into year-end 2023, the Unilever share price closed around 3,755p, marking a 10% decrease over the trailing year.

Despite recent weakness, the share price remains up 15% from pre-pandemic highs early in 2020. Unilever’s strong brands and pricing power should drive upside over the long run. Near-term volatility is likely, however, if macro headwinds continue dampening European and emerging market consumption.

Here’s an interesting read for you: Recession Proof Stocks CFDs and Other Assets

What was the Price of Unilever Stock in 1982?

Based on historical records, the market value of Unilever PLC’s 1.4p ordinary shares stood at 34.58p per share as of March 31, 1982.

To provide context around the Unilever share price level, 1982 proved challenging for global stock markets, including Unilever and other U.K.-listed multinationals. The early 1980s brought high inflation and interest rates, which fueled recessionary pressures in major economies like the United States and the United Kingdom.

For consumer products giants, this economic backdrop brought falling disposable incomes and purchasing power, which constrained organic sales growth. Currency fluctuations also impacted earnings for companies like Unilever, which derived most revenues outside the British Pound.

Unilever dealt with ballooning costs for commodity inputs like edible oils and animal fats, which squeezed profit margins. Difficulties in Brazil and other high-inflation developing markets further pressured earnings.

As profits declined, so did investor appetite for consumer defensive stocks, which traded down in sympathy with the weakening economic outlook. These macro challenges helped explain Unilever’s depressed share price by the end of fiscal 1982.

You might also like to read: Is the ASOS share price on the rise?

In Summary

Unilever remains a high-quality consumer defensive stock with steady growth and generous shareholder returns over the long run. Despite some near-term headwinds from softening consumer demand, currency fluctuations, and margin pressures, Unilever boasts an exceptional portfolio of household brands and pricing power that should drive revenues higher over time. 

While the path forward may be volatile given the uncertain economic backdrop, patient investors could be rewarded for holding Unilever shares. 

The company’s stable cash generation supports ongoing dividends and buybacks, offering an attractive yield. As macro conditions eventually improve, Unilever is primed to exit the downturn in a stronger competitive position.

Become a member of Markets.com and access a cutting-edge trading platform!

“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”