Is Unilever Fairly Priced After Choppy 2025 Performance and Portfolio Reshaping?

• If you are wondering whether Unilever is still a steady blue chip or a quietly undervalued opportunity, this breakdown will help you assess whether the current price makes sense for your portfolio.
• The share price has been choppy, up 1.3% over the last week but still down 2.8% over 30 days and 5.5% year to date, even though it has delivered 2.5% over 1 year, 19.8% over 3 years and 26.5% over 5 years.
• Recent attention has centered on Unilever's ongoing portfolio reshaping and strategic focus on higher margin brands, which some investors see as important for reigniting growth. Markets have also been reacting to shifting sentiment on consumer staples generally, as investors weigh defensive qualities against concerns about pricing power and cost pressures.
• On our valuation framework, Unilever scores a 3 out of 6, suggesting the stock appears undervalued on some metrics but not all. Next, we unpack how different valuation approaches view the company and, by the end, look at a more structured way to pull those signals together into a single narrative.

Unilever delivered 2.5% returns over the last year. See how this stacks up to the rest of the Personal Products industry.

Approach 1: Unilever Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those amounts back to today. For Unilever, this is done using a 2 Stage Free Cash Flow to Equity approach, which models an initial period of higher visibility and then a steadier long term phase.

Unilever generated trailing twelve month free cash flow of about €6.6 billion, providing a solid starting point for the forecast. Analyst estimates and subsequent extrapolations suggest free cash flow could be around €9.1 billion by 2035, based on the assumption of modest but consistent growth as the portfolio mix shifts toward higher margin brands.

Bringing all these projected cash flows back to today, the model arrives at an indicative intrinsic value of €52.83 per share. That compares to the current market price, implying the stock trades at roughly a 7.6% discount relative to this DCF estimate. In valuation terms, this suggests the market price is broadly aligned with the cash flow outlook, with a slight positive skew for long term investors under these assumptions.

Result: ABOUT RIGHT

Unilever is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Unilever.

Approach 2: Unilever Price vs Earnings

For a mature, consistently profitable business like Unilever, the price to earnings ratio is a practical way to judge valuation because it directly links what investors pay to the profits the company generates today. In general, faster growth and lower risk justify a higher PE, while slower growth or higher uncertainty call for a lower, more conservative multiple.

Unilever currently trades on a PE of about 22.2x, which is slightly below both the Personal Products industry average of around 22.8x and the broader peer group average of roughly 25.9x. Simply Wall St also calculates a proprietary Fair Ratio of 22.5x, which reflects what investors might reasonably pay for Unilever given its earnings growth outlook, margins, size and risk profile. This Fair Ratio is more tailored than a simple peer comparison, as it adjusts for the company’s specific fundamentals rather than assuming all consumer staples names deserve the same multiple.

With Unilever’s actual PE of 22.2x sitting very close to the Fair Ratio of 22.5x, the shares appear broadly in line with what its fundamentals warrant at this stage.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Unilever Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simple stories you build around a company that connect your view of its future revenue, earnings and margins to a financial forecast and, ultimately, a fair value estimate.

On Simply Wall St, Narratives live in the Community page and are used by millions of investors as an easy, accessible tool for turning their assumptions into numbers. This allows them to quickly compare a Fair Value with the current share price to decide whether Unilever looks like a buy, hold or sell.

Because Narratives update dynamically as new information comes in, such as earnings results or news on the ice cream spin off, your fair value view can evolve without you having to rebuild your whole investment thesis each time.

For Unilever today, some investors in the Community are running optimistic Narratives with fair values around £59 based on improving margins and premiumisation. More cautious investors are closer to £39 because they worry about competition, execution risk and slower revenue growth. Seeing where your own view fits in that range can help you act with more confidence.

Do you think there's more to the story for Unilever? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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