Picture supply: Unilever plc
Unilever (LSE: ULVR) shares have been on a little bit of a roll, up almost 10% thus far in 2026. It appears longer-term security may be again in vogue as higher-risk tech shares have been unstable. However the share value dipped 3% Thursday morning (12 February), on the again of 2025 full-year outcomes.
Unilver reported 3.5% underlying gross sales development, with 1.5% being right down to precise quantity development. Of that, the corporate’s ‘Power Brands’ led the way in which with development of 4.3% — and volumes up 2.2%. However income dipped a bit, on account of forex actions and disposals.
We noticed a modest 0.7% rise in underlying earnings per share (EPS) with margins improved for the reason that ice cream enterprise was cut up out to kind The Magnum Ice Cream Firm. Magnum reported a 20% fall in working revenue the identical day — although it did face important separation and restructuring prices.
What does this imply for shareholders?
Money rewards
An underlying gross margin of 20% contributed to €5.9bn in free money circulate. Consequently, the quarterly dividend is up 3%. And the board has launched a brand new €1.5 billion share buyback programme.
Unilever has been refocusing on core merchandise and simplifying its enterprise over the previous few years. And it seems to be prefer it’s paying off. CEO Fernando Fernandez highlighted the goal of “prioritising premium segments and digital commerce, and anchoring our growth in the US and India.” And he added: “Despite slowing markets, our sharper focus and disciplined execution underpin our confidence for 2026 and beyond.”
So what ought to we count on for 2026? Administration steering signifies underlying gross sales development between 4% and 6% for the yr, based mostly on at the least 2% underlying quantity development. And we should always count on a “modest improvement” within the yr’s working margin.
All in all, I charge this as a strong efficiency in a time of pressured market situations.
Worth proposition?
Unilever shares have placed on a powerful 27% over the previous few years. And that does seem to have put a defensive premium on the inventory now. EPS of 268p offers us a trailing price-to-earnings (P/E) ratio of 20 for the yr simply ended — considerably forward of the FTSE 100 long-term common. And that’s for a inventory with fairly common dividend yields a bit above 3%.
Forecast earnings development in this sort of enterprise is modest at greatest, even whether it is optimistic within the present situations. However it doesn’t look more likely to carry the P/E down very far within the subsequent few years.
My essential worry proper now’s that Unilever shares maybe look absolutely valued — or perhaps even a bit toppy. And we may very well be in for a interval of stagnation, particularly if the latest ‘flight to safety’ amongst traders ought to ease off when immediately’s financial turmoil calms down. I think that’s why the income dip prompted the outcomes morning wobble.
This doesn’t imply I don’t charge Unilever as an funding. I nonetheless do, and I reckon new ISA traders ought to think about it as a comparatively secure cornerstone for a long-term portfolio.
