Unilever PLC ( NYSE:ULVR )
Based in the UK, Unilever PLC (NYSE:ULVR) is a consumer goods company primarily focused on beauty/cosmetic products, home care, and foodstuffs. With over 400 brands under its umbrella, Unilever is extremely well diversified and competes in almost every country around the globe. Recently, Unilever has been making an effort to shake things up by refocusing and adding a new member to its board. These efforts have led to a 200% increase in mentions of the company, prompting investors to wonder if Unilever is a good investment. Currently, Unilever is trading for around £3,700 ($4645.33).
Is Unilever a Good Investment - Positives
Wondering if you should invest in Unilever? We’ve compiled a few reasons why it might be the perfect time to begin building a stake in the consumer goods company.
Every investor loves a good dividend. They provide an extra bit of free cash flow and reward investors for sticking around for the long haul. Therefore, it’s great to see Unilever offering a dividend yield of around 4.4%, almost double competitor Procter & Gamble's 2.5% yield.
While it’s no secret that Unilever has been struggling in recent years, it’s making an effort to change things around and get back on track. Firstly, it moved away from its confusing dual-share structure that left the company based in two different countries, switching to being based solely out of the UK. It then appointed a new CEO with some big ideas for the company. And most recently the company added billionaire activist investor Nelson Peltz to the board after he acquired a 1.5% stake in the company. Considering Peltz managed to turn around P&G during his time in the company, it’s not a big stretch of the imagination to envision him doing something similar for Unilever.
One thing Unilever has going for it is its huge range of globally recognized brands. Some of its IPs include Dove, Hellman’s, Ben and Jerry’s, and Vaseline. Thanks to a host of well-known brands, Unilever seems in the perfect position to focus on ramping up its sales efforts.
While many companies acquire the majority of their revenue from North America, thanks to its diverse range of products, Unilever is not one of them. In fact, Unilever only gets around 20% of its revenue from the NA region. Considering over 60% of its revenue already comes from emerging markets, Unilever shouldn’t have an issue with growth as long as it gets its marketing efforts on track.
With a market cap of around $110 billion, Unilever is a massive company. Because of this, it’s got plenty of resources to acquire and grow smaller companies with a ton of potential. This is precisely what it did with Dollar Shave Club. This strategy allows Unilever to quickly grow and expand into new markets. Furthermore, as the company has a ridiculous amount of resources, it’s able to compete with pretty much any company, making it a force to be reckoned with.
Is Unilever a Good Investment - Negatives
Before you invest, you should always consider the negatives. One seemingly insignificant detail can be enough to wreak havoc on an investment. Here are a couple of reasons to avoid Unilever, at least for the time being.
Unilever's biggest competitor is Procter & Gamble. With Peltz at the helm, Procter & Gamble has increased in value by an impressive 63% over the past 5 years. Over this same period, Unilever has posted a 16% loss. Clearly, Unilever needs to switch up its strategy if it wants to have any chance of providing investors with returns near that of P&G.
Despite boasting an impressive portfolio of products, Unilever has been struggling to find its footing in recent years. After appointing a new CEO, investors had hopes that Unilever would begin turning around. However, too many big changes were announced in too little time, causing a significant hit to Unilever’s stock price. While the changes were quickly rescinded, it made it clear that Unilever is struggling to find a happy middle ground where investors are happy and the company can focus on growth.
Hype Asset of the Day - Conclusion
Overall, Unilever is a globally recognized brand with tons of potential, let down by a series of missteps. On paper, the company is in a pretty good place, but poor decisions from management have led to it stagnating in recent years. However, with Peltz on the board, that could quickly change. If he’s able to breathe new life into Unilever in the same way he did with P&G, Unilever could make for a phenomenal longer-term investment. If you’d like to receive more trending stocks direct to your inbox, check out our premium plans. Alternately, you can visit our FAQ page to learn more about the services offered by HypeIndex.
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