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What's in the Cards for Unilever (UN) this Earnings Season?
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Unilever NV is set to report first-quarter 2017 results on Apr 20. Last quarter, the company delivered organic sales growth of 2.2% (in local currency).
A glimpse of Unilever’s stock performance shows that its shares have been rallying since the past three months. Its shares rallied 24.2% over the past three months, outperforming the Zacks categorized Soap & Cleaning Materials industry’s gain of 11.2%. Notably, the industry is part of the top 6% of the Zacks Classified industries (16 out of the 256).
Unilever sports a Zacks Rank #1 (Strong Buy) and we believe there is still much value left in the stock, which is quite evident from its VGM Score of ‘B’.
Let's see how things are shaping up for this announcement.
What’s Driving the Stock?
The company has been trending higher on the back of its recent strategic business reviews, aiming to deliver profits and boost shareholder value amid sluggish growth and increasing competition in the global packaged goods industry. The strategic review was done to gain investor support following the unsolicited $143 billion takeover offer by Kraft Heinz Co. (KHC - Free Report) in Feb 2017.
Consequently, the consumer products giant decided to sell its spreads business, including brands like Flora and Stork butter, which has been witnessing a slowdown for the past few quarters. Unilever also stated that it is integrating its food and refreshment businesses into a Netherlands-based unit. Since the company is listed both in Amsterdam and London, it is looking to simplify its corporate structure to ease the process of buying or disposing of businesses. Even though the changes will result in some job cuts in senior and middle management, it will bring savings from its procurement and marketing operations. Among other changes, Unilever plans to reduce the number of its commissioned advertisements by 30%.
Furthermore, the maker of Dove products and Ben & Jerry announced that it would buy back shares, hike dividends and raise its cost savings target. The company raised its cost-savings target to 6 billion euros from 4 billion euros and hiked dividend by 12%. It will also launch a share buyback plan of 5 billion euros ($5.3 billion) this year. Moreover, it has set a target for net debt of two times EBITDA, which would mean enough flexibility for acquisitions or returning cash to shareholders.
Unilever has also undertaken a program called Connected 4 Growth to reduce costs, under which individual expenses are reviewed during each accounting period rather than rolled over. The company is also consistently focusing on product improvement through innovation. Moreover, Unilever has entered into many deals to fortify its position in home care and personal care products. These acquisitions will strengthen its portfolio and generate substantial revenues.
Meanwhile, the company continues to struggle with declining volumes in Brazil and a soft economy in Russia. Further, it has been witnessing softness in the developed markets in North America or Europe with little signs of recovery. Additionally, it has been delivering weak results for the past few quarters due to sluggishness in the emerging markets, which account for about two-thirds of the company’s total revenue. Though these markets are generally volatile, they offer robust long-term prospects.
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Treehouse Foods, Inc. (THS - Free Report) has an Earnings ESP of +4.62% and a Zacks Rank #2.
5 Trades Could Profit ""Big-League"" from Trump Policies
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Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
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What's in the Cards for Unilever (UN) this Earnings Season?
Unilever NV is set to report first-quarter 2017 results on Apr 20. Last quarter, the company delivered organic sales growth of 2.2% (in local currency).
A glimpse of Unilever’s stock performance shows that its shares have been rallying since the past three months. Its shares rallied 24.2% over the past three months, outperforming the Zacks categorized Soap & Cleaning Materials industry’s gain of 11.2%. Notably, the industry is part of the top 6% of the Zacks Classified industries (16 out of the 256).
Unilever sports a Zacks Rank #1 (Strong Buy) and we believe there is still much value left in the stock, which is quite evident from its VGM Score of ‘B’.
Let's see how things are shaping up for this announcement.
What’s Driving the Stock?
The company has been trending higher on the back of its recent strategic business reviews, aiming to deliver profits and boost shareholder value amid sluggish growth and increasing competition in the global packaged goods industry. The strategic review was done to gain investor support following the unsolicited $143 billion takeover offer by Kraft Heinz Co. (KHC - Free Report) in Feb 2017.
Consequently, the consumer products giant decided to sell its spreads business, including brands like Flora and Stork butter, which has been witnessing a slowdown for the past few quarters. Unilever also stated that it is integrating its food and refreshment businesses into a Netherlands-based unit. Since the company is listed both in Amsterdam and London, it is looking to simplify its corporate structure to ease the process of buying or disposing of businesses. Even though the changes will result in some job cuts in senior and middle management, it will bring savings from its procurement and marketing operations. Among other changes, Unilever plans to reduce the number of its commissioned advertisements by 30%.
Furthermore, the maker of Dove products and Ben & Jerry announced that it would buy back shares, hike dividends and raise its cost savings target. The company raised its cost-savings target to 6 billion euros from 4 billion euros and hiked dividend by 12%. It will also launch a share buyback plan of 5 billion euros ($5.3 billion) this year. Moreover, it has set a target for net debt of two times EBITDA, which would mean enough flexibility for acquisitions or returning cash to shareholders.
Unilever has also undertaken a program called Connected 4 Growth to reduce costs, under which individual expenses are reviewed during each accounting period rather than rolled over. The company is also consistently focusing on product improvement through innovation. Moreover, Unilever has entered into many deals to fortify its position in home care and personal care products. These acquisitions will strengthen its portfolio and generate substantial revenues.
Meanwhile, the company continues to struggle with declining volumes in Brazil and a soft economy in Russia. Further, it has been witnessing softness in the developed markets in North America or Europe with little signs of recovery. Additionally, it has been delivering weak results for the past few quarters due to sluggishness in the emerging markets, which account for about two-thirds of the company’s total revenue. Though these markets are generally volatile, they offer robust long-term prospects.
Unilever NV Price, Consensus and EPS Surprise
Unilever NV Price, Consensus and EPS Surprise | Unilever NV Quote
Stocks Poised to Beat Earnings Estimates
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Pinnacle Foods Inc. has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Treehouse Foods, Inc. (THS - Free Report) has an Earnings ESP of +4.62% and a Zacks Rank #2.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>