RE: Brokers view26 May 2022 16:27
Hello Gary59, the £48 fair value estimate is based on what I think is a conservative view of future dividends (although whether it turns out to be conservative is another matter).
It's basically a discounted dividend valuation, so I estimate future dividends based on various factors (rate of return on capital, amount of earnings retained etc) and then discount those future dividends by 7% per year as that's the UK stock market's long-term annualised total return.
I'm certainly not saying that I expect the price to get to £48 anytime soon, but as things stand today, I think that would be a reasonable price.
I agree with you that investor sentiment towards Unilever is generally poor, partly due to its weak performance in recent years and partly because 2022 and 2023 are likely to be very unpleasant for most people on this planet.
However, recessions and other periods of bad news are usually the best times to buy, precisely because prices are low and yields are high.