Unilever (LSE: ULVR) (NYSE: UL.US) shares are up 10% over the past 12 months against just 3% for the FTSE 100 average, and thats nice.
But its not such short-term fripperies that interest me. In fact, on that basis the shares are on a forward P/E of nearly 21 on full-year forecasts, and thats some way ahead of the FTSEs long-term average of 14. The predicted dividend yield, at 3.3%, is barely ahead of average, and theres no earnings per share (EPS) growth indicted for 2014 either.
On those figures alone, Unilever is not a share to buy.
Trouncing the FTSE
But look back over the longer term, and we see significant outperformance.
Over the past five years Unilever shares are up 65% against not much more than half that for the FTSE. And over ten years, were looking at 150% for Unilever compared to 50% for the FTSE.
Looking closer during the stock market crash that started in mid 2007 and didnt hit bottom until early 2009, Unilever shares fell considerably less than the index as a whole.
On top of that, while dividend yields havent exactly been smashing the FTSE average of around 3%, they have been rising ahead of inflation and thats vital if you want long-term income.
All of that, I think, shows Unilevers key attraction for long-term investors its reliable and safe. And its easy to see why.
Diversity
Unilever manufactures a huge number of products in the food, cleaning and personal care markets, and those are things that people just dont cut back on in hard times. Lipton, Walls, Knorr, Hellmans, Lux, Cif, Sunlight, Dove, Sunsilk, Flora and Domestos theyre all there, together with many more. In fact, around a dozen of Unilevers brands bring in annual sales of more than 1 billion each.
The firms other key strength lies in its global reach. In 2013, only around a quarter of turnover came from Europe, with a third from the Americas (including South America). The rest was from Asia, Middle East, Turkey, Africa, Russia all over the world, in fact. So growing global prosperity will drive Unilevers future growth too, and it will reduce its volatility due to more local economic problems.
And that reach is ever extending. At first-half time this year, Chief Executive Paul Polman told us that we continue to invest for the long term with our programme to take our brands into new countries with the launches of Lifebuoy in China, Omo in Arabia and Clear in Japan.
The key
He went on to say We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.
And that sums it up for me long-term growth ahead of the companys markets.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of Unilever. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
