Down 5% In A Week, Unilever Stock Set For Bounce Back
The stock price of Unilever (NYSE:UL) reached its 52-week high of $64 in October 2020, and has since dropped from that level. Further, the stock fell almost 5% in the past week, to levels of around $57 currently. Unilever reported 1H 2021 earnings in late-July, with revenue coming in at $30.3 billion, up marginally from $30.2 billion for the same period last year. Rising expenses saw operating profit drop from $5.5 billion to $5.2 billion over this period, which saw EPS drop to $1.40 from $1.47.
Now, after a 5% fall in a week, will Unilever stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for Unilever stock average 2.5% in the next one-month (twenty-one trading days) period after experiencing a 4.5% drop over the previous week (five trading days).
But how would these numbers change if you are interested in holding Unilever stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Unilever stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF Unilever stock moved by -5% over five trading days, THEN over the next twenty-one trading days Unilever stock moves an average of 1.8%, with a strong 68% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of Unilever Stock Movements:
Question 1: Is the average return for Unilever stock higher after a drop?
Answer: Consider two situations,
Case 1: UL stock drops by 5% or more in a week
Case 2: UL stock rises by 5% or more in a week
Is the average return for UL stock higher over the subsequent month after Case 1 or Case 2?
Unilever stock fares better after Case 1, with an average return of 1.8% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of -0.7% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Unilever stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Unilever stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For UL stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Unilever after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
It’s pretty powerful to test the trend for yourself for Unilever stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.
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