Investor Insights: Unilever vs Procter & Gamble Stock Analysis

A recent report reveals key insights comparing Unilever and Procter & Gamble, highlighting Unilever's potential for growth despite historical underperformance. Analysts suggest that volume growth may lead to a shift in investor favor towards Unilever in the coming years.

Date: 29-11-2024

AI Rating: 5

The report provides a detailed comparison between Unilever (NYSE: UL) and Procter & Gamble (NYSE: PG) regarding their performance metrics and growth prospects. Although UL has shown volume growth in recent periods, its revenue growth trails significantly behind PG, which has seen better revenue performance.

1. Revenue Growth: Unilever's revenue has grown at an average annual rate of 0.9% from $62.4 billion in 2020 to $63.9 billion in 2023. In contrast, Procter & Gamble's revenue growth has been notably higher, at 3.4% from $76.2 billion to $84.0 billion over a similar timeframe, driven significantly by pricing gains. This disparity highlights PG's stronger revenue expansion compared to UL.

2. Net Margins: Unilever's adjusted net margin improved from 8.6% in 2020 to 10.4% in 2023. In comparison, Procter & Gamble maintained a stronger net income margin at 19.4% in fiscal 2024, consistent with that in 2021. This suggests PG remains more profitable than UL, which may contribute to its better stock performance.

3. Financial Position: Procter & Gamble has a better financial position with a lower debt-to-equity ratio (9% vs. Unilever's 23%), and its cash position has increased, contrasting with the decline in Unilever's cash reserves.

Overall Evaluation: The analysis indicates that while Unilever shows promise with volume growth, Procter & Gamble currently outperforms in revenue growth, profitability, and financial risk management. The disparity in growth rates and margins lends to a higher valuation multiple for PG compared to UL's lower multiple, indicating limited upside potential for both stocks in the near term. Investors may consider Unilever for long-term gains based on its recent volume growth strategies, while PG might be preferable for lower risk and more stable returns.

Stocks: UL PG