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What's in Store for Unilever (UN) this Earnings Season? - Analyst Blog

Zacks Equity Research
Updated

Unilever NVUN is set to report second quarter 2015 results on Jul 23. Last quarter, the company delivered organic sales growth of 2.8% (in local currency), driven by pricing gains of 1.9% and volume growth of 0.9%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Unilever has been delivering weak results since the past few quarters due to continued slowdown in the emerging markets, which account for about two-thirds of the company’s total revenues. Though emerging markets offer strong growth prospects, they are generally volatile.

In the preceding quarter, emerging markets grew 5.4%, but moderated from the preceding quarter’s growth of 5.7%. The company witnessed some improvement in India and more stable conditions in China. However, the company is still struggling with adverse economic conditions in Brazil and Russia.

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Among the developed markets, the company is witnessing improvement in North America as the impact of the economic recovery is being felt by consumers. However in Europe, pricing declined across all categories, despite strong improvement in volumes. We note that the company continues to expect sluggishness in Europe.

Though the company anticipates currency to benefit 2015 sales by about 8% – 9% at current rates, the company still remains concerned about deteriorating trends in Europe, Brazil and Russia.

Unilever holds a Zacks Rank #3 (Hold).

Stocks to Consider

Stocks worth considering in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:

Cal-Maine Foods Inc. CALM with an Earnings ESP of +5.17% and a Zacks Rank #1 (Strong Buy).

Calavo Growers Inc. CVGW with an Earnings ESP of +6.67% and a Zacks Rank #1.

Dean Foods Company DF with an Earnings ESP of +3.85% and a Zacks Rank #1.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DEAN FOODS CO (DF): Free Stock Analysis Report
 
CAL-MAINE FOODS (CALM): Free Stock Analysis Report
 
CALAVO GROWERS (CVGW): Free Stock Analysis Report
 
UNILEVER N V (UN): Free Stock Analysis Report
 
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Zacks Investment Research