Why Reckitt Benckiser could beat Unilever, Diageo, Burberry and British American Tobacco after today’s update

Reckitt Benckiser Group Plc (LON:RB) (RB.L) shares could offer more investment appeal than shares in Unilever plc (LON:ULVR) (ULVR.L), Diageo plc (LON:DGE) (DGE.L), Burberry Group plc (LON:BRBY) (BRBY.L) and British American Tobacco plc (LON:BATS) (BATS.L)

Reckitt Benckiser Group Plc
Reckitt Benckiser Group Plc

Reckitt Benckiser Group Plc (LON:RB) (RB.L) has released a Q1 trading update to the stock market today. It has performed in line with expectations and has registered a continued strong performance in Health. This has been led by Mucinex and Durex. However, growth was offset to an extent by headwinds in Scholl, which also impacted ENA performance.

In the Home and Portfolio categories, Reckitt Benckiser’s performance was negatively impacted by the Korea HS issue. However, growth rates are set to improve through the year and the company is on track for its full year net revenue target of +3% LFL.

The Mead Johnson acquisition remains on track for completion by the end of Q3. A strategic review of the Reckitt Benckiser food business has now commenced.

Overall, I feel the Q1 update is relatively strong. Macroeconomic conditions were challenging and against this backdrop, the business has performed relatively well.

In the last 6 months, the Reckitt Benckiser share price is flat. It has therefore underperformed other global consumer stocks such as Unilever plc (LON:ULVR) (ULVR.L), Diageo plc (LON:DGE) (DGE.L), Burberry Group plc (LON:BRBY) (BRBY.L) and British American Tobacco plc (LON:BATS) (BATS.L). Unilever shares are up 12%, Diageo shares are 1% higher, Burberry is up 4% and British American Tobacco has gained 11%.

In my view, Reckitt Benckiser has long-term investment potential. I think the strategy it is pursuing is logical and could mean it registers improving financial and share price performance in future. Its exposure to some of the most lucrative emerging markets in the world means it could have a bright long-term future.

Although it faces some macro challenges in the short run, I feel its investment appeal is relatively high over a longer timeframe. I also think the acquisition of Mead Johnson could act as a positive catalyst on its share price.

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