Investment Analysis of Unilever Company

Investment Analysis

Contents
EXECUTIVE SUMMARY.......................................................................................................................3
MAIN BODY.............................................................................................................................................4
Investment summary...............................................................................................................................4
Business Description...............................................................................................................................4
Industry Overview and Competitive Positioning.....................................................................................8
Financial analysis..................................................................................................................................12
Valuation...............................................................................................................................................16
Investment risks.....................................................................................................................................18
Disclosures............................................................................................................................................18
APPENDIX:.............................................................................................................................................19
REFERENCES........................................................................................................................................26

EXECUTIVE SUMMARY
The project report is based on a FTSE listed company named Unilever company. The company
operates in consumer goods sector and had a large product portfolio. In the report, various kinds
of aspects are covered including financial analysis of company, valuation, market share etc. In
terms of three-year financial analysis, it can be summarized that company’s liquidity position is
poor. The latest news about company is that their CEO stated that company reported just 0.3%
growth in last few months due to COVID 19. The current share price of company is around,
62%.

MAIN BODY
Investment summary
In this part of report, recommendation to buy/sale/ hold the share of Unilever has been done by
help of a valuation model. Below descriptive analysis is done in such manner:
PE ratio: Current share price/ Earnings per Share
Current share price: $62.58
Unilever's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in June
2020: $2.52
Price to earnings: 62.58/2.52
= 24.85
Recommendation: On the basis of above computed value price to earnings ratio, this can be
recommended that investors should buy company’s share. This is so because value of earnings
per share is more than one and it is a positive sign that investors will not face any lose if they buy
stock X. There is only concern about buying to this stock is that in upcoming time period, there
can be inflation in company’s financial performance which may lead to decreased value of
company’s share or stock price. In this case, investors may face loss on stock X. Though, it is
just a possibility because actual data is presenting that investors should buy the stock due to
effective ratio. It is rare that company’s earnings will fell down to below one from currently
value of $2.52.
Business Description
In this aspect of report, detailed analysis of selected company has been done in such manner:
About company- Unilever company is a British Dutch global company that is headquartered in
London, United Kingdom, Rotterdam and Netherlands. The company was founded in year 1929
by merging of Dutch margarine manufacturer and British soap makers (About Unilever

company, 2020). This company has around 400 brands with an average turnover of 53 million
Euro per year.
Core business- The company is categorized into four different divisions named as: food,
refreshments, home care and personal care. Below a table is presented which shows detailed
information about core products and service of company:
Segment Item
Food Condiments and extracts (Beef, French
mayonnaise, sauces, Asian spices etc.),
desserts (ice pops, ice creams, syrups etc.)
these are some examples, as it is difficult to
describe each item.
Refreshment Tea, coffee, juice packets, milk products,
breakfast cereal and many more.
Home care Cleaner (detergents, fabric softeners),
decorative items and many more.
Personal care Make up kit, cloths, nail files, shoes,
perfumes, hand soap, shampoo and many
more.
Contribution to revenues- Each of these products plays a key role in order to generate overall
revenues of company (About contribution of each product, 2019). Below contribution of
different types of product portfolio is explained in such manner:
Data in Million Euros 2017 2018 2019
Food and refreshment 20697 20227 19287
Home care 10574 10131 10825
Personal care 20697 20624 21868

2017 (Data in Million Euros)
2018 (Data in Million Euros)
2019 (Data in Million Euros)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
20697
20227
19287
10574
10131
10825
20697
20624
21868
Contributi on to revenues of each
product segment
Food and refreshment Home care Personal care
Business model- Each company has a particular model in order to gain revenues. Unilever plc
focuses on direct to consumer business model. The objective of this model is to sell items
without any mediator. As there are numerous stores of Unilever in which consumers can directly
visit and can make purchase. This model was effectively implemented in year 2017 (About
business model, 2019).
Underneath a table is presented that shows main sources of revenues of company:
Categories
Personal care
Turnover 20.7 Billion Euro 20.2 Billion Euro 20.1 Billion Euro
Turnover growth 2.6% 0.5% 13.2%