Shares of multinational consumer-goods conglomerate Unilever(NYSE: UL) jumped higher on Thursday even though the S&P 500 was markedly down. The company just reported its latest quarterly financial results, which were full of pleasant surprises. And that's why Unilever stock was up 5% as of 11 a.m. ET today.
A modest uptick in consumer demand
In the first quarter of 2024, sales were up a little more than 4% year over year. That's a small increase, to be sure, but small gains are to be expected with a company as big as Unilever. And investors were nevertheless encouraged because the company's sales volume increased by 2.2%.
For a mature consumer staples company such as this, there are three usual paths to growth. Companies can increase sales volume or raise prices -- or do both. Unilever mostly grew thanks to volume increases alone in the first quarter, which is the best path of the three.
By comparison, many of Unilever's peers are struggling with sales volume right now. For example, Procter & Gamble reported financial results last week, and its sales volume was flat year over year. Investors are encouraged with Unilever's relatively strong results compared to its sector.
Performing particularly well for Unilever were products in the beauty and well-being category as well as sales in Latin America. And these strengths pushed financial results higher, exciting investors.
A good start to a multiyear plan
Unilever is at the outset of a multiyear journey to invest in better growth and better profits. And it's taking the task seriously. It's separating its ice cream business into its own company, and it's looking for other ways to boost its profit margins.
Unilever stock certainly isn't an investment idea with the highest upside. But its encouraging start to 2024 coupled with its long-term focus on profitable growth are things to consider with the stock trading at an unusually low valuation right now.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Unilever Plc. The Motley Fool has a disclosure policy.
