Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

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

Biotech Insider Alert - $5 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!