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What Should You Know About Unilever PLC’s (LON:ULVR) Earnings Trend?

Erna Eldridge

The most recent earnings update Unilever PLC’s (LSE:ULVR) released in December 2017 signalled that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 16.76%. Below, I’ve presented key growth figures on how market analysts predict Unilever’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Unilever

Analysts’ expectations for this coming year seems rather subdued, with earnings climbing by a single digit 2.86%. The following year doesn’t look much more exciting, though earnings does reach €7.37B in 2021.

LSE:ULVR Future Profit May 14th 18

Even though it’s helpful to understand the rate of growth each year relative to today’s level, it may be more valuable to analyze the rate at which the company is moving every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Unilever’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.86%. This means, we can anticipate Unilever will grow its earnings by 6.86% every year for the next few years.

Next Steps:

For Unilever, there are three fundamental aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ULVR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ULVR is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ULVR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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.