Why I won’t be rushing to buy Unilever shares

first_img Image source: Getty Images. Andy Ross | Saturday, 13th February, 2021 | More on: ULVR “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address Simply click below to discover how you can take advantage of this. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Andy Ross owns shares in Reckitt Benckiser. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Our 6 ‘Best Buys Now’ Shares See all posts by Andy Ross Why I won’t be rushing to buy Unilever shares Unilever (LSE: ULVR) shares are popular with many UK investors. It’s the biggest company on the FTSE 100 by market capitalisation. It’s a truly international company, even previously having a dual Anglo-Dutch structure. This has now been solidified with a listing just in the UK.There’s a lot to like for investors who want a solid, relatively defensive company, but I’m not so sure it’s a share I want to put my money into. Especially after last week’s results.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…A brief look at the resultsThose results showed that full-year underlying sales rose by 1.9%. The majority of the improvement came from rising volumes rather than price hikes.Underlying operating profits were below what analysts had expected. They rose 0.7%, if exchange rates are included, and decreased by 5.8% if the exchange rates are stripped out.  On the positive side, debt was down, cashflow was up, and the dividend was increased. It went up by 4% in the fourth quarter. Net debt is now equivalent to 1.8 times cash profits, so is well under control.  Commenting on the results, Alan Jope said: “Early in the year, we refocused the business on competitive growth, and the delivery of profit and cash as the best way to maximise value. We have delivered a step change in operational excellence through our focus on the fundamentals of growth. As a result, we are winning market share in over 60% of our business in the last quarter, on the basis of measurable markets.”The pros and cons of investing in Unilever sharesUnilever’s relatively small exposure to cleaning products, especially compared to Reckitt Benckiser, means it has struggled more during the pandemic. Beauty and personal care products make up a larger part of its sales. They account for about 41% of the total and haven’t been so much in demand as customers stay at home. Unilever does have strong brands, growing international markets and strong environmental, social, and governance (ESG) credentials. The ESG focus could attract future investment, as this is becoming a more important investing criterion for many institutional investors.The company has also identified areas it wants to offload, such as its tea business. This streamlining will allow it to focus its huge marketing budget on the brands that will deliver higher growth, and margins.Overall, as I’m looking at shares that will increase my passive income in future years, while also boosting the capital growth of my portfolio, I just don’t see Unilever shares fitting the bill. Its growth is sluggish—that was the case even before the pandemic. Also, the shares trade on a price-to-earnings ratio of around 17, so aren’t cheap. I don’t think management is doing enough to boost margins. So far I don’t think the strategy is either working or moving fast enough.So, even after the recent share price fall, and despite the company having many strengths, I’m not tempted to buy Unilever shares.  last_img read more