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Unilever PLC (UL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Unilever PLC (UL)

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Intrinsic Value (DCF)

Current$64.70
→
Intrinsic$51.01
-21%
$31.08$51.01$90.70
Market implies 13% growth for 5 years
UL trades at a premium to our conservative estimate — investors expect above-average performance.
At $65, the market prices in 13% annual cash flow growth — a moderate expectation aligned with historical trends (8%).
Range: Bear $31 → Bull $91. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →4%6%8%10%
8%$64$71$79$87
10%$42$46$51$56
12%$29$33$36$40
14%$22$25$27$30

Bull Case

  • Bull case ($91) offers 40% upside at 10% growth, 8% discount
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Bear case ($31) implies 52% downside at 6% growth, 12% discount
  • Price reflects 13% growth expectations vs 8% historical — high bar to clear
  • Trading 21% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$8.40B
Year 2$9.08B
Year 3$9.80B
Year 4$10.59B
Year 5$11.43B
Terminal$181.17B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$7.78BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is UL stock undervalued or overvalued?
🔴 OVERVALUED

UL trades at $64.70 vs. our DCF-derived intrinsic value of $51.01, implying -21% downside. Using a 9.5% WACC and 8.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($75.25) suggests limited upside.

What is UL's intrinsic value?

Using a 5-year DCF model: Base FCF of $7.78B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $24.52B net debt and dividing by 2.51B shares: Bear $33.49 | Base $51.01 | Bull $75.25. Current price $64.70 implies -21% to base case.

How is UL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($152.42B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 19.6x.