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Are Investors Undervaluing Unilever PLC (UL) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Unilever PLC (UL). UL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 20.25 right now. For comparison, its industry sports an average P/E of 22.04. Over the past 52 weeks, UL's Forward P/E has been as high as 21.52 and as low as 18.18, with a median of 19.39.

Investors will also notice that UL has a PEG ratio of 3.30. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UL's PEG compares to its industry's average PEG of 3.32. UL's PEG has been as high as 3.74 and as low as 2.40, with a median of 3.31, all within the past year.

Another notable valuation metric for UL is its P/B ratio of 4.73. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 5.23. Within the past 52 weeks, UL's P/B has been as high as 4.85 and as low as 4.05, with a median of 4.49.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Unilever PLC is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UL feels like a great value stock at the moment.


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