eyeQ: Unilever vs Reckitt Benckiser

Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Here, it picks out the better defensive bet.

24th April 2025 10:50

by Huw Roberts from eyeQ

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Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance. eyeQ

Unilever

Macro Relevance: 47%
Model Value: 4,750.41p
Fair Value Gap: +2.05% premium to model value

Reckitt Benckiser

Macro Relevance: 48%
Model Value: 4,855.97p
Fair Value Gap: -2.51% discount to model value

Data correct as at 24 April 2025. Please click glossary for explanation of terms. Long-term strategic model.

This week weve had earnings updates from two consumer staple stocks – Unilever (LSE:ULVR) and Reckitt Benckiser Group (LSE:RKT). They are interesting names to watch right now - boring consumer staples tend to fare well in times of economic hardship, so theyre a good gauge of how consumers are feeling among the growing chat about a global trade war.

Reckitts share price suffered yesterday mainly thanks to headlines about delays in the disposal of two non-core businesses. This morning, Unilevers share price benefited from managements assertion that the hit from tariffs would be limited and manageable. Thats exactly what investors want to hear from a stock deemed a defensive place to hide during times of turbulence.

On that basis, the snap market reaction would seem to favour Unilever over Reckitt as your preferred safe-haven play. The macro perspective largely agrees, but with a word of warning on near-term timing.

First, both stocks have low macro relevance score: macro explains 47% of ULVR price action, 48% of RKT. Company fundamentals matter more right now.

Where the top-down view aligns with the bottom-up is in terms of macro momentum.

eyeQ model value for ULVR has risen 7.8% in the past few weeks, with the improvement in financial market risk appetite fuelling an improvement in macro conditions. Over the same period, RKT model value has fallen 12.4%. The macro environment favours Unilever.

There is a but, however. On eyeQ, Unilever sits around 2.0% rich to model, while Reckitt sits around 2.5% cheap to model. Put another way, Unilever has already discounted a fair degree of good news, and the sell-off in Reckitt suggests it has priced in some of the bad news already.

Unilever looks the better defensive bet relative to Reckitt, but these arent optimal entry levels. 

eyeQ Reckitt BenckisereyeQ Unilever

Source: eyeQ. Past performance is not a guide to future performance. 

Useful terminology:

Model value

Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.

Model (macro) relevance

How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.

Fair Value Gap (FVG)

The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.

Long Term model

This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.

These third-party research articles are provided by eyeQ (Quant Insight). interactive investor does not make any representation as to the completeness, accuracy or timeliness of the information provided, nor do we accept any liability for any losses, costs, liabilities or expenses that may arise directly or indirectly from your use of, or reliance on, the information (except where we have acted negligently, fraudulently or in wilful default in relation to the production or distribution of the information).

The value of your investments may go down as well as up. You may not get back all the money that you invest.

Equity research is provided for information purposes only. Neither eyeQ (Quant Insight) nor interactive investor have considered your personal circumstances, and the information provided should not be considered a personal recommendation. If you are in any doubt as to the action you should take, please consult an authorised financial adviser. 

Disclosure

We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.

Please note that our article on this investment should not be considered to be a regular publication.

Details of all recommendations issued by ii during the previous 12-month period can be found here.

ii adheres to a strict code of conduct.  Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.

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