Seeking Alpha
Profile| Send Message|
( followers)  

Unilever plc (NYSE:UL) recently announced higher first-quarter earnings per share. In U.S. dollars, earnings of 68 cents per share were more than 20 cents higher than the year-prior result. The company has a solid ROE of 38%, which more than triples the industry average of 10%. In addition to enjoying stellar growth, UL pays a dividend yield of 2.9%, which is well above the industry average. During the past two months, full-year 2008 analyst earnings estimates increased from $2.05 to $2.11 per share.

Full Analysis

Unilever plc, together with its subsidiaries, produces and supplies fast moving consumer goods in food as well as home and personal care product categories in Europe, the Americas, Asia, and Africa.

It offers soups, bouillons, sauces, snacks, mayonnaise, salad dressings, olive oil, margarines, spreads and frozen foods. The company’s offerings also includes cooking products, such as liquid margarines under various brand names like Knorr, Hellmann's and Becel/Flora to name a few.

Unilever plc also provides ice creams under the international Heart brand, including Cornetto, Magnum, Ola, Ben & Jerry's, Breyers, Klondike, and Popsicle brands; tea-based beverages under Lipton, Brooke Bond, and PG Tips brands; weight management products under Slim Fast brand; and nutritionally enhanced products under Annapurna and AdeS/Adez brands.

In addition, it offers personal care products, laundry products and household care. The company also offers solutions for professional chefs and caterers.

Growth

The company seems to be benefiting from higher food prices. Its first-quarter report was recently released, which listed highlights that included underlying sales growth of 7.2% as well as increasing contribution from pricing, which was up 4.8% in response to rising commodity costs.

Earnings per share also increased. In U.S. dollars, first-quarter earnings of 68 cents per share were more than 20 cents higher than the year-prior result.

Group Chief Executive Patrick Cescau said:

We have had a good start to the year, with strong organic growth across our categories and an underlying improvement in operating margin. We continue to invest behind our brands, while taking the necessary pricing action to recover a sharp increase in commodity costs. We have a strong innovation program for 2008, with many important initiatives already in the market. We expect our productivity and value improvement initiatives to continue to deliver excellent results.

Unilever has a solid return on equity [ROE] of 38%, which more than triples the industry average of 10%. Its net profit margin of 11.1% is also well above the industry average of 4.5%. Additionally UL’s earnings per share are expected to grow by 15% over the next 3 – 5 years, versus the industry average of 10%.

Income

In addition to enjoying stellar growth, the company is paying a rewarding dividend yield of 2.9%, which is well above the industry average as the majority of the companies within UL’s industry pay no dividend.

Higher Estimates

Current Wall Street forecasts for the full-year 2008 currently stand at $2.11 per share, a penny above last week’s projections and two cents higher than last month’s estimates. Two months ago, analyst expectations were $2.05.

Source: Unilever: Stellar Growth, Strong Earnings