Unilever secure in a wavy market

As Unilever updates the market Joe Healey, Investment Research Analyst at The Share Centre, explains what it means for investors.

Article updated: 17 October 2019 8:00am Author: Joe Healey

  • Despite missing Q3 expectations, Unilever’s share price reacts positively rising 1%
  • Consistent free cash flows opens up room for ongoing innovation
  • With a strong product range and distinct brand loyalty we continue to recommend Unilever as a ‘buy’

Unilever missed its Q3 expectations with underlying sales growth coming in 0.1% lower than the consensus estimate at 2.9%. Despite this, the share price has continued to rise by 1% displaying investor acceptance that they should consider these results fairly solid in a tough market. All regions were generally in line with expectations and emerging market growth coming in at 5.1%, demonstrating a well-diversified company with a strong range of products operating across international markets.

Momentum has been relatively maintained in terms of meeting forecasts for underlying sales growth which is expected to come in at the lower half of the 3-5% guidance. Improvements in underlying operating margin keeps the company on track for its 2020 target and another consistent quarter of secure free cash flow makes room for the innovation and portfolio evolution that Unilever are set to undertake in order to serve the faster growing geographies and channels.

For investors, these results display the resilience of Unilever. Despite difficult market conditions the company has navigated them reasonably well displaying its defensive qualities. Robust growth in South East Asia alongside the willingness to continue innovating its product lines to remain relevant to the evolving consumer is also a positive. We continue to recommend this stock as a ‘buy’ with medium risk in a balanced portfolio.

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.