IS UNILEVER A BUY? | UNILEVER SHARE PRICE – RELATIVE VALUATION (ULVR)

In this post, we look at the Unilever stock price and its relative valuation to understand; is Unilever is a buy based on the share price vs similar companies. We will also look at what the analysts are saying and if they believe Unilever is a good investment.

If you are interested in seeing our view of Unilever’s fair value / intrinsic value, see our post reviewing Unilever’s fundamentals and DCF model.

The data used in the below analysis comes from a combination of SharePad and TipRanks.

Table of Contents

Unilever Company Overview

• Unilever Introduction
• Shareholder Ownership

Unilever Relative Valuation Review

• Analysts Targets
• Comparable Analysis – Equity Valuations
• Comparable Analysis – Enterprise Valuations
• Unilever Historical Valuation Multiples

Unilever Stock Valuation Summary

• Valuation Football Field Chart

Unilever Company Overview

Unilever Introduction

Unilever Company Description

Unilever is a diversified personal product, home care, and packaged food company. Its brands include Knorr soups and sauces, Hellmann’s mayonnaise, Lipton teas, Axe and Dove skin products, and the TRESemme haircare brand.

The firm has been acquisitive in recent years; high-profile purchases include the mail-order men’s grooming business Dollar Shave Club and Seventh Generation cleaning and personal-care products.

Unilever Fundamentals

Current Share Price (m)	£35.23	Revenue (m)	£44,053
Shares Outstanding (m)	2,610	EBITDA (m)	£9,575
Market Cap (m)	£91,936	EBITDA Margin	22%
Cash (m)	£3,776	EV/EBITDA	11.81x
Total Debt (m)	£24,924	Debt / EBITDA	2.6x
Enterprise Value (m)	£113,085	P/E (YE)	16.5

Unilever Revenue Breakdown – Region

Region	Revenue (m)	%
Others	£28,996	65.8%
United States	£8,271	18.8%
India	£4,719	10.7%
United Kingdom	£2,052	4.7%

Unilever Revenue Breakdown – Product

Product	Revenue (m)	%
Beauty & Personal Care	£18,397	41.8%
Food & Refreshment	£16,776	38.1%
Home Care	£8,880	20.2%

Unilever Share Price History

Current Price:

£35.23

52 WK Low:

£33.28

52 WK High:

£43.60

Unilever Shareholder Ownership

Shareholder	Holdings	%
BlackRock, Inc.	295,840,737	16.4%
The Vanguard Group	111,550,911	6.2%
Leverhulme	48,966,764	2.7%
Legal & General Invest.	48,455,690	2.7%
Lindsell Train Limited	43,452,854	2.4%
State Street Global.	37,570,338	2.1%
Merrill Lynch & Co.	31,650,087	1.8%
Credit Suisse	24,694,210	1.4%
Flossbach von Storch AG	24,345,000	1.4%
FMR LLC	22,970,299	1.3%
abrdn plc	22,902,992	1.3%
Fundsmith, LLP	22,731,578	1.3%
Fidelity International Ltd	21,652,934	1.2%
BNY Mellon	20,377,340	1.1%
UBS Asset Management	19,523,841	1.1%
Others	1,004,068,971	55.8%

Unilever Valuation Review

Analysts‘ View of Unilever

Unilever Price Target – Analysts’ Price Targets

Analyst Name	Firm	Position	Price Target	Action
Guillaume Delmas	UBS	Sell	£34	Maintained
Warren Ackerman	Barclays	Hold	£40	Maintained
Celine Pannuti CFA	J.P. Morgan	Sell	–	Reiterated
James Edwardes Jones	RBC Capital	Hold	£32	Reiterated
Eileen Khoo	Morgan Stanley	Hold	£38	Reiterated
Eamonn Ferry	Credit Suisse	Buy	£46	Maintained
Martin Deboo	Jefferies	Buy	£41	Maintained
John Ennis CFA	Goldman Sachs	Hold	£40	Maintained
James Targett	Berenberg Bank	Hold	£37	Reiterated
Bruno Monteyne	Bernstein	Hold	£33	Upgraded
Tom Sykes	Deutsche Bank	Hold	£46	Maintained
Unknown Analyst	Citigroup	Buy	£45	Reiterated
Jeremy Fialko	HSBC	Hold	£37	Maintained
David Hayes	Societe Generale	Buy	£41	Upgraded
Unknown Analyst	Canaccord Genuity	Buy	£40	Reiterated
Chris Pitcher	Redburn Partners	Hold	–	Upgraded

The average analysts’ price target is £39, which is above the stock’s current price. The highest price target is £46, and the lowest is £32.

Analysts’ Consensus – Is Unilever a Buy?

Analysts’ Recent Actions for Unilever Stock

31% of analysts rate Unilever as a buy, and 56% of analysts rate the stock a hold. There are still 13% with a rating of sell. There have been no downgrades to the stock; alternatively, 19% of analysts have upgraded their view. 81% have either reiterated or maintained their position.

Unilever Comparable Analysis

Caution should be taken as no two companies are precisely the same. Companies can be at different stages of maturity, have different operating segments, operate in different geographical regions etc. Best efforts have been made to use similar companies in the below analysis.

Companies used in determining the comp values are as follows:

GlaxoSmithKline, Johnson & Johnson, Kimberly Clark, L’Oreal, Nestlé and Procter & Gamble.

Unilever Relative Valuation – Equity Valuations

Unilever P/E – Price to Earnings vs Competitors

Unilever has a P/E ratio of 16.1x, which is lower than the average of this sample, with only GlaxoSmithKline having a lower P/E ratio. Forecasted P/E is again lower than the competition at 17.4x; GlaxoSmithKline is again lower, as is Johnson & Johnson at 17.3x.

Unilever P/S – Price to Sales vs Competitors

Unilever’s P/S multiple is also lower than all the competitors at 2.1x and considerably lower than the majority. GlaxoSmithKline is again lower than most, along with Kimberly Clark. Conversely, L’Oreal is significantly higher than the others at 6.4x.

Unilever P/FCF – Price to Free Cash Flow vs Competitors

Similar to P/E and P/S, P/FCF is lower than all the competitors at 18.3x. However, L’Oreal and Nestlé are significantly higher than the rest. Unilever is the only company with a forecasted P/FCF that is higher than the current ratio, increasing from 18.3x to 18.5x. All other companies reduce, but only GlaxoSmithKline has a forecasted P/FCF lower than Unilever.

Unilever Relative Valuation – Enterprise Valuations

Unilever EV/EBITDA vs Competitors

Unilever’s EV/EBITDA at 11.6x is lower than the average and the lowest of all those compared. L’Oreal continues to be at the top end of the scale.

Unilever EV/Sales

Unilever’s EV/Sales at 2.6x is again lower than the average and the majority of the competitors. Kimberly Clark has an EV/Sales also at 2.6x. L’Oreal once again has the highest ratio.

Unilever Valuation Comps Analysis

To understand the relative value of Unilever, we can use the average multiples from Unilever and its competitors. The below table shows you these calculations. Unilever reports its annual financial statements in euros, so the valuations below are shown in euros. The euro share price from the analysis has then been converted to pounds sterling in the last column to reflect the trading currency.

You can see from this table, using the relative valuations, that Unilever’s share price ranges from £52.31 using the P/E multiple to £71.64 if we use the P/FCF multiple. So all are significantly higher than the current share price.

Metric	Comps	Enterprise Value	Net Debt	Equity Value	Shares	Share Price	Share Price
EV/Revenue	4.3	€224,011	€25,177	€198,834	2,610	€76.19	£64.00
EV/EBITDA	17.3	€197,691	€25,177	€172,514	2,610	€66.11	£55.53
P/E	24.5	€187,675	€25,177	€162,498	2,610	€62.27	£52.31
P/Sales	4.0	€233,455	€25,177	€208,278	2,610	€79.81	£67.04
P/FCF	28.7	€247,753	€25,177	€222,576	2,610	€85.29	£71.64

Unilever Valuation Multiples vs Historical

Unilever EV/EBITDA

Unilever’s current EV/EBITDA multiple at 11.6x is lower than the 10-year average of 12.5x. 11.6x is equal to 2015, with only 2013 being lower in the last ten years.

Unilever EV/Sales

Unilever’s 2021 EV/Sales at 2.6x is narrowly higher than the ten year average of 2.5x. 2.5x is the lowest of the last five years; however, 2012 – 2016 were all lower, with 2012 the lowest at 1.9x.

Unilever P/E – Price/Earnings Multiple

2021 P/E ratio at 16.1x is considerably lower than the ten year average of 19.6x. It is also the lowest value in the previous ten years. The highest P/E ratio was in 2015 at 21.8x.

Unilever P/S – Price/Sales Multiple

At 2.2x, Unilever’s P/S ratio is slightly lower than the ten year average of 2.2x. Similar to Ev/Sales, the P/S ratio is the lowest in the last five years. 2012 had the lowest P/S ratio of 1.7x.

Unilever P/FCF – Price/Free Cash Flow

P/FCF ratio in 2021 was 18.3x, which is lower than the ten year average of 23x, and except for 2020, it is the lowest in the last ten years. 2020 was the lowest at 17.7x.

Unilever Valuation Summary

Unilever Value Valuation Football Field Chart

Is Unilever a good investment?
Is Unilever a buy at current valuations?

At the time of analysis, the current stock price is at the lower end of the 52-week trading range and the analysts’ price targets.

The comps valuations are significantly higher than current prices because Unilever has relatively low valuation multiples compared to the sample set of competitors.

The DCF models all returned an intrinsic value above the current market value. To see more detail on the intrinsic valuations, see our post reviewing Unilever’s fundamentals and DCF models.

There are many elements to consider when understanding if a stock is a good investment. This post only aims to review if Unilever is a good value compared to its competitors – its relative valuation.

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Disclosure

I/we have open long positions in Unilever. I/we do not intend to make any changes to our position in the coming weeks but have the right to do so if situations change or further information becomes available.

This analysis has been written by a Bull Headed Bear analyst/author for Bull-Headed-Bear.com. I/we receive no compensation for this post other than any payments received from ads or affiliate links.