- Price
- $13.27
- Fair value
- $18.60
- Discount
- 28.7%
- Uncertainty
- Medium
- LSEG rating
- 2.33
- Moat
- Wide
- Next earnings
- 2026-10-27
- Next earnings is estimate
- No
- Company name
- Reckitt Benckiser
- Sector
- Household & personal health products
- About
- Reckitt Benckiser is a UK-based consumer health and hygiene company. It calls its core business "Core Reckitt," built around 11 "Powerbrands" that make up about 80% of net revenue: Dettol and Lysol in disinfectant cleaning, Finish and Vanish in dishwashing and stain removal, Harpic in toilet cleaning, Nurofen, Mucinex, Gaviscon, and Strepsils in over-the-counter health, and Durex and Veet in intimate wellness. Separately, it owns Mead Johnson Nutrition, maker of the Enfamil infant formula brand, which it bought for close to $18 billion in 2017 and has been trying to sell since 2024. In December 2025, Reckitt completed the sale of its Essential Home business, including Air Wick and Calgon, to private equity firm Advent International for $4.8 billion, keeping a 30% stake in the buyer's holding vehicle. Emerging markets are now Reckitt's main growth engine, while Europe and North America grow more slowly or shrink. Reckitt's ordinary shares trade on the London Stock Exchange; five RBGLY ADRs represent one ordinary share.
- Thesis
- RBGLY trades around $13.27, about 29% below the analysts' $18.60 fair value estimate. The market is worried about two overhangs. First, Mead Johnson: Reckitt has been trying to exit the infant-formula business for two years, reportedly seeking around $7 billion versus the nearly $18 billion it paid in 2017, and a sale keeps getting complicated by necrotizing enterocolitis (NEC) litigation over Enfamil. Second, the numbers look messy after the Essential Home sale: adjusted earnings per share fell 9.7% in H1 2026 simply because the profit that business used to contribute is gone. Underneath that, the ongoing business is accelerating: Core Reckitt like-for-like revenue growth picked up to 4.2% in Q2 2026 from 2.7% in Q1, led by emerging markets, and management held full-year guidance of 4%-5% growth and 24.9%-25.6% operating margin. Mead Johnson's first federal bellwether NEC trial also ended in a defense verdict for Reckitt in August 2026, removing one source of uncertainty, and Reckitt keeps returning cash through a rising dividend and a new buyback. If Core Reckitt's growth keeps compounding and Mead Johnson is eventually sold, even at a discount, for a clean break, the market could re-rate the simpler remaining business and the discount could close. The honest counter-case: hundreds of NEC lawsuits are still pending, an earlier $60 million verdict against Mead Johnson was only reversed on appeal and sent back for retrial rather than dismissed, and a large adverse verdict or a stalled sale process could keep tying up capital and management attention well beyond 2026.
- Risks
- Mead Johnson still faces hundreds of pending necrotizing enterocolitis (NEC) lawsuits over Enfamil in US federal and state courts. Reckitt won the first federal bellwether trial in August 2026, but an earlier $60 million verdict against it was only reversed on appeal and sent back for retrial, not dismissed. A large adverse verdict could still happen and would also make Mead Johnson harder to sell.
Reckitt has been trying to sell Mead Johnson Nutrition since 2024 and reportedly wants around $7 billion, a steep markdown from the nearly $18 billion it paid in 2017. Talks with Danone were only exploratory as of April 2026. A stalled or failed sale process would keep tying up capital and management attention.
Adjusted earnings per share fell 9.7% in H1 2026 because Essential Home's profit contribution is gone. Further portfolio simplification, including a Mead Johnson sale, would likely cause a similar near-term earnings drag even if it is good for the business long term.
Europe, one of Reckitt's larger markets, keeps shrinking: like-for-like revenue there fell 4.2% in Q1 2026 and was still negative in H1. Growth guidance depends on emerging markets and North America offsetting continued European weakness.
Reckitt reports in British pounds while RBGLY trades in US dollars. Swings in the pound-dollar exchange rate can move the ADR's returns up or down independent of how the underlying business performs.
RBGLY is a US over-the-counter ADR, not a NYSE or Nasdaq listing. It likely trades with less liquidity and wider bid-ask spreads than Reckitt's London-listed ordinary shares.
Private-label and store-brand products compete with Reckitt's household cleaning and OTC health brands, especially among price-sensitive shoppers, which can pressure volumes and limit pricing power in some categories.
- Recent events
- 2026-09-16: Reckitt announced up to $600 million of multi-year investment in its US operations, including a new science and innovation campus in New Jersey and an expanded OTC manufacturing facility in North Carolina opening in H1 2027.
2026-08-31: A federal jury in Chicago returned a unanimous defense verdict for Mead Johnson in Inman v. Mead Johnson, the first bellwether trial to reach a verdict in the multidistrict NEC baby-formula litigation. Reckitt shares rose on the news.
2026-07-29: Reckitt reported H1 2026 results. Core Reckitt like-for-like net revenue grew 2.7% in H1, accelerating to 4.2% in Q2. Adjusted diluted EPS fell 9.7% to 152.1p, mainly due to the Essential Home divestment. The board raised the interim dividend 5% to 88.6p and announced a new buyback of up to £500 million over the next 12 months. Full-year guidance was maintained.
2026-06-12: The Illinois Fifth District Appellate Court reversed a $60 million jury verdict against Mead Johnson in Watson v. Mead Johnson, an NEC case, citing errors in jury instructions on the duty to warn, and sent the case back for a new trial.
2026-04-10: Press reports said Danone was exploring a bid for Mead Johnson Nutrition, with Reckitt reportedly seeking offers of around $7 billion, far below the nearly $18 billion it paid for the business in 2017.
2026-02-20: Reckitt paid a £1.6 billion special dividend (235 pence per share) to shareholders following the Essential Home sale, alongside a 24-for-25 share consolidation.
2025-12-31: Reckitt completed the sale of its Essential Home business (Air Wick, Calgon, Cillit Bang) to Advent International for $4.8 billion, retaining a 30% stake in the acquisition vehicle.