In the last three years, Unilever stock has performed better than Nike stock, with UL stock experiencing little change while NKE stock has seen a sharp decline. UL has consistently underperformed the S&P 500 over this period, with negative returns in each of the last three years. On the other hand, Nike stock has also underperformed the S&P 500, indicating a challenging market environment for both companies.
Nike has shown better revenue growth compared to Unilever, with an average annual growth rate of 11% between 2020 and 2023. Unilever, on the other hand, has seen slower revenue growth of just 1% during the same period. While Unilever has seen growth in personal and home care segments, food and refreshment sales have been sluggish. Nike, on the other hand, has seen growth in men’s footwear and Jordan Brand sales, although it has faced challenges with supply chain constraints and slower recovery in China.
Despite Unilever being more profitable, Nike has a better financial position due to lower debt levels and higher cash reserves. Nike’s operating margin has also expanded over the years, although it has seen some pressure on margins recently due to inflation and higher freight costs. However, Nike’s strong financial position gives it an advantage over Unilever in terms of managing risks and uncertainties in the market.
Looking at prospects, Nike is considered the better choice of the two companies due to its attractive valuation. While Unilever’s stock is trading at a lower P/S multiple compared to its historical average, Nike’s stock is trading at a higher multiple. Despite the decline in Nike’s P/S multiple due to slowing sales growth and margin pressure, the negatives are believed to be priced in, and the stock is likely to outperform Unilever in the next three years.
Overall, while both companies face challenges in the market environment, Nike is seen as having better growth prospects and financial strength compared to Unilever. With its strong revenue growth and better financial position, Nike is expected to outperform Unilever in the coming years. Investors looking for a potential growth stock with attractive valuation may find Nike to be a better pick over Unilever in the current market conditions.
