Will Unilever outperform Diageo, Whitbread, Reckitt Benckiser and Imperial Brands after Q1 update?

Do Unilever plc (LON:ULVR) (ULVR.L) shares have more investment appeal than shares in Diageo plc (LON:DGE) (DGE.L), Whitbread plc (LON:WTB) (WTB.L), Reckitt Benckiser Group Plc (LON:RB) (RB.L) and Imperial Brands PLC (LON:IMB) (IMB.L)?


The Unilever plc (LON:ULVR) (ULVR.L) share price has risen 1.2% today after it released Q1 results to the stock market. Unilever’s turnover increased 6.1% to €13.3 billion, which includes a positive currency impact of 2.4%. Its underlying sales growth was 2.9%, with price up 3% and volume down 0.1%. Underlying sales growth was 3.4% excluding spreads.

The company’s emerging markets underlying sales growth was 6.1%, with price up 5.3% and volume up 0.8%. In my view, this could help to improve investor sentiment in the stock as the majority of Unilever’s sales are derived from emerging markets.

Overall, Unilever’s sales growth has been ahead of its markets. This could reflect the company’s investment in innovation and in brand support, while also providing evidence of the company’s high degree of customer loyalty.

The ‘Connected for Growth’ strategy launched in 2016 may also be starting to bear fruit, with the actions being taken by the company keeping it on track to deliver underlying sales growth of 3-5%. This would be likely to be ahead of the growth rate in the wider market. Unilever is also expecting an improvement in underlying operating margin this year of 80bps, while dividends are 12% higher.

In the last 3 months, the Unilever share price has gained 18%. That’s ahead of other consumer stocks such as Diageo plc (LON:DGE) (DGE.L), Whitbread plc (LON:WTB) (WTB.L), Reckitt Benckiser Group Plc (LON:RB) (RB.L) and Imperial Brands PLC (LON:IMB) (IMB.L). Diageo shares are 2% up, Imperial Brands has gained 4%, Whitbread shares are up 1% and Reckitt Benckiser has risen 6%.

In my view, Unilever has investment appeal. I think it is performing well in terms of both sales and profit growth, which is likely to positively impact on its earnings per share. With a bias towards emerging markets, I think it is well placed to register further share price growth on a relative basis in future.

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