Henkel: Weaknesses In Consumer Assets Exposed By High Inflation
(Preview) Company Update (HEN3 GR) (Downgrade to Neutral)
Summary
We are downgrading our rating on Henkel from Buy to Hold, having lost confidence in both its businesses and its management.
The midpoint of Henkel's 2022 guidance implies an Adjusted EPS that is 25% lower year-on-year and 37% lower than in 2019.
High input cost inflation following Russia's invasion of Ukraine has exposed continuing weaknesses in Henkel's consumer assets.
Henkel is far more impacted than its competitors. The turnaround since 2020 has not worked, but even more restructuring is coming.
At €60.50, Henkel's Preferred stock is trading at a 17.7x P/E and a 3.1% Dividend Yield, not cheap enough for the risks involved. Avoid.
Introduction
We are downgrading our rating on Henkel AG & Co. KGaA from Buy to Hold, as we believe our investment case to be broken. Henkel Preferred shares have halved in the past 5 years and are now at a level last seen in 2012.
We initiated our coverage on Henkel with a Buy rating in June 2021, and last reiterated it in December 2021. Since our initiat…