Unilever plc (ADR) (UL), The Procter & Gamble Company (PG): 3 Consumer Giants for the Long Run

Page 1 of 2

In the newly released list of World’s Most Respected Companies in 2013, Barron’s featured several non-U.S. companies, including Unilever plc (ADR) (NYSE:UL) and Nestle. While Unilever ranked eleventh with mean scores of 3.24, Nestle was in the sixteenth position. Should we invest in these highly respected non-U.S. firms at their current prices? Let’s find out.

Unilever

Unilever plc (ADR)Unilever plc (ADR) (NYSE:UL) has been performing quite well under the leadership of Paul Poleman. Since June 2012, Unilever has experienced a decent gain of nearly 31% on the market, from $31 per share to around $40.50 per share. Unilever plc (ADR) (NYSE:UL) has benefited from its growing business in the emerging markets. Asia/AMER/RUB is considered the most rapid growth cluster, with 10.6% growth, while the Americas and Europe experienced lower growth of 7.9% and 0.8%, respectively.

The company reported that around 55% of its turnover was derived from the emerging markets, a much higher percentage compared to its direct global competitor, The Procter & Gamble Company (NYSE:PG), with 37% of the total revenue coming from emerging markets. Unilever plc (ADR) (NYSE:UL) could benefit in the future by the recent increase in Hindustan Unilever’s stake, from 52.7% to 75% with a total investment of $5.4 billion. Harish Manwani, the company’s COO, mentioned that Unilever has great growth opportunities in rural India which has a population of 700 million people.

Paul Poleman has restructured Unilever plc (ADR) (NYSE:UL)‘s business, divesting its food business to focus on Beauty and Personal Care in the emerging markets. Unilever had divested North American Frozen Foods for $267 million and Skippy peanut butter for $700 million in cash. In the first half of 2012, it expanded its footprint in beauty and personal care sector by spending $694 million on Concern Kalina, the Russian owner of Black Pearl and Silky Handscreams. The market values Unilever at around 17.3 times its forward earnings.

P&G and its $10 billion cost savings program

Unilever has a lower valuation than The Procter & Gamble Company (NYSE:PG). The market values P&G at 17.8 times its forward earnings. Despite its higher valuation, The Procter & Gamble Company (NYSE:PG) could deliver a lot of value to its shareholders with its business restructuring and improvements under the leadership of CEO A.G. Lafley. Lafley would be expected to accelerate The Procter & Gamble Company (NYSE:PG)’s $10 billion cost reduction program. Activist investor Bill Ackman, one of the largest P&G shareholders, mentioned that a $10 billion cost cutting included $6 billion in COGS reduction, $1 billion in overhead savings, $1 billion in marketing efficiencies, and $2 billion in operating leverage.

Ackman estimated that with an EBIT (earnings before interest and taxes) margin of 4% and organic sales growth of 6%, The Procter & Gamble Company (NYSE:PG)’s EPS might reach $6 per share in 2016. When a simple multiple of 20 was applied, its share price might rise to $125 per share, a whopping 62% to its current trading price.

Nestle

Nestle ranked sixteenth in the list of the world’s most respected companies with a mean score of 3.17. Nestle has also grown its emerging market revenue share significantly, from 30% of the total revenue in 2001 to 45%. The company has undertaken a lot of effort to drive the business forward with its long-term approach, including building capabilities in terms of R&D, cost savings and channels, expanding its presence and performance in both emerging and developed markets, and doing further to enhance the company’s capabilities and its global leadership position.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!