Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Unilever PLC’s (LSE:ULVR) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Unilever
Did ULVR beat its long-term earnings growth trend and its industry?
I look at the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze many different companies on a more comparable basis, using the latest information. For Unilever, its latest trailing-twelve-month earnings is €6.05B, which compared to last year’s figure, has increased by 16.76%. Since these figures may be somewhat short-term, I have determined an annualized five-year figure for ULVR’s net income, which stands at €4.89B This means generally, Unilever has been able to steadily improve its profits over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is merely owing to industry tailwinds, or if Unilever has experienced some company-specific growth. In the last few years, Unilever expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the UK personal products industry has been growing its average earnings by double-digit 18.37% in the previous twelve months, and 24.66% over the last five years. This shows that any tailwind the industry is profiting from, Unilever has not been able to leverage it as much as its average peer.
What does this mean?
Unilever’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Unilever gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Unilever to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ULVR’s future growth? Take a look at our free research report of analyst consensus for ULVR’s outlook.
- Financial Health: Is ULVR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.