Unilever PLC (NYSE:UL) the British multinational consumer goods company, is down nearly 15% since reaching a high of $45.95 on May 19, this year. The stock has recently experienced a moving average crossover, with the 50-day moving average crossing downwards the 200-day moving average. From a technical perspective, this could suggest that the stock faces a potential decline in the near future.

Unilever’s product line includes personal care, home care, beverages and ice cream, which it markets under different brands including Dove, Sunsilk, and Axe, among others.

The company operates under four business segments – Personal Care (36% of revenue), Foods (27% of revenue), Refreshment (19% of revenue) and Home care (18% of revenue).

Geographically, the company draws much of its income from Asia & Africa, which contribute around 40% of revenue while Americas account for 32.5% with Europe contributing 27%. All of these markets present different opportunities as economies grow at varying rates. For instance, in are recent report, the EU just lowered its growth forecast to 0.8% and 1.1% for year 2014 and 2015 respectively, a significant step down from the previous estimates of 1.2% and 1.7% for the two years.

This further signals that the company’s European business is likely to face a slowdown in the coming quarters. Additionally, the last two years have seen a slowdown in organic volume growth due to challenging markets in both developed and emerging economies.

Unilever posts marginal uptick in recent results

Unilever reported Q3, 2014 results on October 23 posting a 2.1% uptick in sales while turnover declined by 2.0%. For the 9-month period, the company’s sales grew by 3.2$ while the turnover was down 4.3%. On both cases, the turnover was primarily affected by negative currency translations.

In the results of H1 2014, the underlying sales grew by 3.7% led by emerging markets, which grew by 6.6%. The group turnover decreased 5.5% to £24 billion, but the operating margins were up 30 bps due to ongoing cost reduction.

Technical Overview

Unilever PLC closed on Nov 6, 2014 at $39.96. The stock is currently on a rebound after an extended period of decline and looks to promise less going upwards, with the immediate resistance at $40.93.

Meanwhile, the current support is set up at $39.91, which again indicates that the stock is more likely to move sideways for the time being.

However, when looking at the stochastic oscillator, the current reversal at the high-end of the scale suggests that the immediate future signals a downward movement, which in this case, is the main trend.

Chart via Quantshare.Com

Conclusion

Unilever has been on a downtrend since September. The stock had a decent first half of 2014, in terms of price performance, rallying from $38.31 in Feb to $45.95 in May. However, it now appears to giving away those gains.

From a fundamental perspective, Unilever is what many would call a defensive stock in the sense that, even though it does fluctuate from time to time, the margins of change are never that high. However, in this case, the movement is significant, resulting into more than 15% change between the two price levels of $38 and $45.

The company remains strong from a balance sheet perspective, with assets spread across the world. Additionally, with the emerging markets accounting for a majority of its income, the company’s growth metrics could be boosted in the next few years, given the prospective economic growth rates of the emerging economies.

The bottom line is that, Unilever is a good stock for lazy investors (passive), those that are not worried about the near-term outlook, but are ready to wait for the company, which also promises dividends.