Every time I think the Unilever (LSE: ULVR) share price is about to spring to life, down it goes again. Sometimes I wonder what’s the point.
I’m probably being unfair. Maybe even a little antsy. It’s nowhere near the worst performer in my self-invested personal pension.
By rights, I should be venting at Diageo, Glencore and GSK. They’ve done far worse. Instead, I’ve chosen to ignore them. Unilever bugs me though.
Why am I so grumpy about this FTSE 100 stock?
It’s one of the UK’s biggest and best companies, but it’s lost its way for years. Since peaking at just over 5,000p in August 2019, the shares have gone nowhere fast, sliding 10% to today’s 4,466p.
CEO Hein Schumacher looked like he might be getting a grip. The shares are up 15% over the last 12 months but now he’s gone after just 19 months and the shares are sliding again.
Schumacher will be replaced by Fernando Fernandez, chief financial officer since January 2024. Fernandez has impressed the board with “his decisive and results-oriented approach and his ability to drive change at speed”. Let’s hope that shines through in the share price. It needs a lift. So do I.
Happily, others are somewhat less glum. Broker Berenberg was pleased the group’s full-year results, published on 13 February, which saw underlying sales growth hit analyst expectations by rising 4%.
Underlying operating margins climbed 18.4%, up 170 basis points. Underlying earnings per share also beat forecasts, rising 14.7% to €2.98.
Berenberg hailed Unilever’s “best-in-class” growth which it expectes to outpace industry peers Nestlé and Procter & Gamble.
The 21 analysts offering one-year share price forecasts have produced a median target of exactly 4,998p. If correct, that’s an increase of almost 12% from today. Throw in the forecast yield of 3.7% (nicely covered 1.7 times), and this would give me a total return of more than 15% if true.
Growth, dividends and meh
That’s pleasant but hardly riveting. It will only recover half the recent slide. Certainly not enough to shake me out of my malaise.
There are reasons to believe in Unilever, including its strong global brand portfolio, huge emerging markets opportunity and defensive nature in troubled times.
Plans to cut jobs, boost productivity, hive of the ice cream division and double down on its largest brands could inject some much-needed life.
However, sticky inflation will continue to force up input costs and squeeze margins, while emerging markets aren’t exactly flying. Unilever is confident it can manage Trump tariffs. We’ll see.
If I didn’t own Unilever shares, I wouldn’t be in a rush to buy them. They’re not exactly cheap, with a price-to-earnings ratio of almost 23 times.
But investing is a long game. I’d lose self-respect if I bowed out of a stock just because I got a bit bored with it. Patience is required. I’ll try ignoring it for a while, like Diageo, Glencore and GSK. Who knows, I might be in for a pleasant surprise on my return.
This post was originally published on Motley Fool
