Reckitt Benckiser is a ‘buy’ for The Share Centre

21st October 2015


As Reckitt Benckiser, the health and cleaning product retailer, updates the market, Helal Miah, Investment Research Analyst at The Share Centre, explains what it means for investors…

This morning, Reckitt Benckiser, the company behind brands like Dettol, Finish, Nurofen and Durex, reported that its Q3 like-for-like sales growth had beaten estimates. Subsequently, the world’s largest producer of household goods and cleaning products has raised its 2015 outlook, despite highlighting underlying macro trends remaining challenging.  Investors should acknowledge that this growth was driven by its focus on Powermarkets and Powerbrands.

We remain fans of the group, highlighting its defensive characteristics and would recommend it as a ‘buy’ for lower risk investors. The group has been an excellent and consistent performer over the last 15 years, although it has been criticised for not having enough exposure to emerging markets. Interested investors will be aware however, that management have addressed this by increasing exposure to higher growth regions. Reckitt Benckiser are also expanding and focussing on the health and hygiene businesses where margins are higher.

The prospective p/e of 24 reflects a business with growth prospects in the emerging markets. The share price has held up relatively well this year and has outperformed its FTSE 100 benchmark. We would suggest investors build a holding by drip feeding into the stock.


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