Should investors buy Unilever shares today?

In the long run, Unilever (LSE: ULVR) shares have been an excellent investment. Not only does it generate healthy capital, but it also provides continuous and growing dividends.

Here, I’m going to look at the investment case for Unilever stock today. Are they still worth buying? Let’s talk about it.

Unilever’s brand power has paid off

Unilever’s latest results, for the third quarter of 2022, show that the business is doing quite well now.

For the period, the group reported sales growth of 10.6%. On the back of this performance, it raises sales guidance for the full year.

One thing Unilever has going for it today is brand power. strong brands such as dove, Domestosand Hellmann’s has allowed it to raise prices and offset inflation. In Q3, for example, the group raised prices by a healthy 12.5% ​​year-on-year.

Another big plus is the nature of the product. Many people buy everyday products over and over again, regardless of the economic situation. This leads to stable sales volumes during periods of economic weakness (like the present).

Having said that, if the global economy slows down, we could see consumers moving down to cheaper brands. This can lead to sales.

Growth is more advanced

Going forward, analysts expect Unilever to continue to grow. For 2022 and 2023, profits are expected to come in at €59.6bn and €61.3bn, up from €52.4bn in 2021. Meanwhile, net profit is predicted to reach €6.6bn and €6.8bn for 2022 and 2023, versus €6 billion in 2021.

It’s worth watching here Credit Switzerland analysts expect most European consumer staples companies to enjoy margin expansion in 2023, due to lower input costs and more price increases. He has an ‘outperform’ rating on Unilever shares with a price target of 4,800p – about 14% above the current share price.

So, overall, business prospects in the medium term look relatively attractive. This is encouraging, from an investment perspective.

Valuation and dividend yield

But what about valuation? Well, according to current earnings estimates, Unilever shares have an expected price-to-earnings (P/E) ratio of around 17.7 right now.

That is above the UK market average. However, the price is lower than the price of competitors. Cokefor example, now has a P / E ratio of about 25 while Procter & Gamble has a P/E of 26.

All things considered, I see fair value given Unilever’s excellent track record when it comes to shareholder wealth. Personally, I like to buy shares in many of these.

A dividend yield of around 3.6% adds weight to the investment case.

Of course, there are risks to consider here. Changing consumer behavior is one of them. There is no guarantee that the Unilever brand will remain popular in the future. Debt on other balance sheets. At the end of June, net debt stood at €27.1bn.

But overall, I see some appeal in Unilever stock today. I plan to buy some more shares for my own portfolio in the near future.