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Reckitt Benckiser Group PLC ADR RBGLY

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Morningstar’s Analysis

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Health Products Help Reckitt to a Solid Q3; Shares Undervalued

Analyst Note

| Philip Gorham, CFA, FRM |

Reckitt reported respectable third-quarter sales results. Revenue in the consumer health division was slightly above our forecasts due to rising demand for cold and flu products, with other divisions reporting sales in line with our estimates. Reckitt has both short- and long-term drivers, and we think this is an above-average quality business model in the consumer staples sector, and believe the current market value is a fairly attractive entry point. We reiterate our wide moat rating and GBX 6,500 fair value estimate.

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Company Profile

Business Description

European firms Reckitt & Coleman and Benckiser combined in 1999 to form Reckitt Benckiser, which recently rebranded to the corporate name Reckitt. The firm's products include a variety of household and personal-care brands, such as Calgon, Lysol, Finish, and Mucinex, many of which have the number-one or -two position in their categories. More recently, Reckitt has repositioned its portfolio, and has entered infant formula through the acquisition of Mead Johnson, expanded its consumer health presence by acquiring SSL International, Schiff Nutrition, and K-Y, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 40% of sales from emerging markets.

103-105 Bath Road
Slough, Berkshire, SL1 3UH, United Kingdom
T +44 1753217800
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2011
Fiscal Year End Dec 31, 2021
Stock Type
Employees 38,945