Unilever currently appears cheaper on historical earnings, but the picture is more nuanced when forward earnings are considered. On a trailing basis Unilever PLC ADR (UL) trades at 21.3x while Nestle SA (NESN) sits at 26.9x. That gap narrows on forward estimates, where both names trade near 17x forward P/E. The relative performance between the two has shifted heavily toward Nestlé over the past year, a dynamic that changes the calculus for a pairs trade.
Valuation snapshot
Key valuation metrics as of Sep 4, 2026 (P/E figures as of Jun 30, 2026) show Unilever with a notable trailing multiple advantage and a larger modeled fair-value gap. Unilever is quoted at a 21.3x trailing P/E, 17.0x forward P/E, an implied 10.8% fair-value upside and a 3.3% dividend yield. Nestlé posts a 26.9x trailing P/E, 17.2x forward P/E, an implied 6.6% fair-value upside and a 4.0% dividend yield.
The important qualification is that forward valuations for the two firms are almost identical. Therefore the numerical edge for Unilever rests mainly on a lower trailing multiple and the resulting larger modeled fair-value gap rather than a materially cheaper forward earnings stream.
Earnings quality and growth trends
Both groups faced weaker top-line momentum in recent periods, though the trajectories differ. Nestlé reported $113.47 billion in revenue for 2025, up from $95.88 billion in 2021, but its 2025 revenue change was negative at -2.0%. Unilever reported $59.33 billion in 2025 compared with $59.69 billion in 2021, recording a steeper 2025 revenue decline of -3.8%.
By 2025 gross margins for the two companies converged to roughly 46%, eroding much of the margin advantage Nestlé traditionally held. Return on equity figures as of Jun 30, 2026 favor Unilever, with reported ROE at 32.9% versus Nestlé’s 25.6%. A higher ROE supports Unilever’s valuation case, although elevated ROE can also reflect greater leverage rather than purely superior operating performance.
Pairs trade status
Performance over the 12 months to Sep 4, 2026 shows Nestlé on the winning side. On a USD-converted basis Nestlé rose 6.8%, from $94.20 on Sep 4, 2025 to $96.20 on Sep 4, 2026. Over the same period Unilever fell 9.1%, from $73.14 to $64.24. That equates to approximately 15.9 percentage points of relative performance in favor of a long-Nestlé / short-Unilever structure, before accounting for dividends, borrowing costs, and FX effects.
Because much of the relative move has already occurred, the pair’s remaining upside now hinges less on Nestlé pulling further ahead and more on whether Unilever’s cheaper valuation can narrow versus Nestlé. Investors contemplating a relative-position trade should therefore weigh whether the mean reversion in multiples is still likely or whether the recent divergence reflects structural differences now priced into the shares.
Market snapshot
As of Sep 4, 2026 Nestlé is trading at 78.31 CHF, up 0.60% as of 5:39 PM CEST / 11:39 AM EDT, with a market capitalization of $201.97 billion and a 52-week range of 70.29–87.09 CHF. Unilever’s ADR is quoted at $64.56, up 0.49% as of 12:17 PM EDT, with a market capitalization of $138.86 billion and a 52-week range of $54.75–$74.97.
Investment takeaways
Value metrics currently favor Unilever on a trailing P/E and modeled fair-value basis. Nestlé offers a higher dividend yield and has recorded stronger five-year revenue expansion in absolute terms, despite recent year-on-year declines. The pairs trade that favored Nestlé over Unilever has already produced a substantial relative move, which argues for caution before extending or levering a similar relative bet.
Realized returns on a long-Nestlé/short-Unilever structure will be materially influenced by foreign-exchange movements, dividend flows and the cost or availability of borrowed stock for the short leg. Those frictions can change the net outcome materially and should be included in any implementation plan.
Historical data availability is limited to a 10-year window on the referenced Pro+ plan, which may constrain longer-term benchmarking when assessing multi-cycle valuation and performance patterns.
Bottom line: Unilever looks more attractive on trailing valuation metrics, while Nestlé retains advantages on dividend yield and cumulative revenue expansion over the five-year window. The relative move to date reduces the remaining margin for error for a pairs trade that relies on Nestlé extending its recent outperformance.