UPDATE: Unilever shares are facing a critical challenge as they struggle to emerge from a dismal five-year performance. Currently valued at 4,590p, this consumer goods giant has seen its stock stagnate, raising urgent questions about its future growth prospects.
The FTSE 100 index has surged by 54.9% over the past five years, translating to a compound annual return of 9.1%. In stark contrast, Unilever has seen its stock price decline by 3.4% during the same period. This underperformance is alarming for investors, particularly as it reflects a broader struggle for the company since the onset of the Covid-19 crisis in 2020.
Currently, Unilever’s market capitalization stands at an impressive £112.4 billion, making it the fourth-largest company on the FTSE 100. However, the stock’s recent trajectory has raised eyebrows. Over the past six months, Unilever’s share price has dipped by 1.2%, and just 1.4% over the past year. This stagnation is especially concerning for a company that has historically been a favorite among fund managers and retail investors alike.
Despite this downturn, Unilever offers a 3.4% dividend yield, slightly above the FTSE 100’s average of 3.1%. Yet, with shares trading at a multiple of 23.4 times trailing earnings, the company’s earnings yield of 4.3% suggests limited potential for future dividend increases, raising further questions about its financial health.
Founded in 1929, Unilever has a long track record of resilience, having survived significant economic downturns, including the Great Depression. With a turnover of €60.8 billion in 2024, spread across 190 countries, the company remains a staple for consumers worldwide. Notably, an estimated 3.4 billion people use Unilever products daily, spanning five divisions: Beauty & Wellbeing, Personal Care, Home Care, Foods, and Ice Cream.
Investors are now left wondering whether Unilever can break its five-year curse. As economic challenges loom, including potential global recessions, the company’s ability to maintain revenues and margins will be critical. While Unilever’s established presence offers some comfort, the market is abuzz with speculation about whether there are more exciting investment opportunities available.
As of August 2023, many investors, including those holding shares in family portfolios, continue to watch the situation closely. A key question remains: will Unilever’s stock finally regain its former glory, or will it continue to be overshadowed by more dynamic market performers?
Stay tuned for updates as this story develops.
