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Quantitative Analysis Of Unilever

Apr. 09, 2018 12:28 PM ETThe Unilever Group (UN), UL6 Comments
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ROCGA Research


  • Unilever has strong and well-positioned local and international brands.
  • The company has a history of leveraging its strengths and creating value. Our analysis shows a compound annual growth rate of 9%.
  • Despite the recent upgrade and rally in price, the company still offers good value.

Investment Thesis

In this installment, we examine Unilever (NYSE:UN) using our quantitative ROCGA methodology (Return On Cash Generating Assets). Our analysis shows that the company has created significant value during the past decade and we see no reason for the company to disappoint over the next few years. Despite the recent rally in price, there is still enough value for those looking for stability and some growth in their portfolio.

Over the course of this article we will attempt to break down the core drivers of value and finally discuss a value range for the forecast years. The compound annual growth rate in ROCGA Valuation has been 9% over the past decade, and our mean hypothesis shows similar growth going forward.

A detailed breakdown of how we calculate our Total Cash Generating Assets, Gross Cash and Return On Cash Generating Assets was in our previous article: Quantitative Analysis Of Colgate-Palmolive. A copy is included in the Appendix.

Unilever: The Business

Unilever was formed when Dutch Margarine Unie merged with British Lever Brothers in 1929. Margarine Unie have roots as far back as the 1870’s when the world’s first margarine factory was set up in Oss, Netherlands. Lever & Co (later to become Lever Brothers) launched the first branded soap, Sunlight in 1884.

Unilever is now a diversified consumer goods producer with over 400 brands and 2.5 billion people around the world using their products every day. Some of its household name brands are Lipton, Knorr, Dove, Axe, Hellmann’s and Omo.

Unilever: A Fundamental View

2017 saw some realignment of Unilever’s portfolio. The lower growth spreads business was sold to US buyout fund KKR for €6.825 billion.

To prepare the platform for long term growth in attractive market segments, the company completed 11 bolt-on acquisitions, including Carver skin care in South Korea, Sundial Brands

This article was written by

ROCGA Research profile picture
Previous history: Quantitative analysis, equity valuation and thematic research for over a decade in London.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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