Fast-moving consumer goods giant Unilever (LSE:ULVR) released its third-quarter trading update today (24 October) and the share price is on the rise.

As I write, it’s up around 4%. But it’s worth setting the move in the context of a longer recovery for the stock that started in April.

It seems the business is well and truly out of the doldrums after weaker earnings in 2022 and 2023, and a wilting stock chart.

Sales and volumes up

In the third quarter of 2024, the firm scored underlying sales growth of 4.5%, with a 3.6% increase in volume.

Chief executive Hein Schumacher welcomed a fourth consecutive quarter of “positive, improved volume growth”.  That outcome’s been driven by all the company’s business groups posting higher volumes year on year.

To me, that one year of progress feels like it might be the beginning of new positive trend in the business likely to endure for the long term.

Previously, the cost-of-living crisis and other challenges in world economies had driven some previously loyal customers to seek cheaper alternative products. On top of that, rising costs had eaten into profit margins.

For a while, with the share price and earnings flagging, it was starting to look like the ‘spell’ had been broken. Perhaps those rock-solid brands owned by the company were no longer able to back up the steady cash flow and dividends that been around for so long.

However, with general economic challenges in retreat, the Unilever business has come roaring back. So I’m willing to believe the firm’s power brands have not lost their magic after all. Indeed, names such as Dove, Comfort, Hellmann’s, Knorr and others may be as strong as ever.

But there are risks for shareholders, as we’ve seen. Any future macro-economic upsets could once again weigh heavy on the firm’s ability to maintain sales, leading to a falling share price.

Higher performance ahead?

Looking ahead, Schumacher said Unilever’s in the early stages of transforming its performance via its Growth Action Plan. The initiative is aimed at “doing fewer things, better and with greater impact”.

That sounds like music to my ears. I discovered that simplicity’s almost always the most effective way ahead when directing my own business a few years ago. Schumacher reckons Unilever’s experiencing positive outcomes from scaling fewer, bigger innovations across its markets, supported by increased brand investment.

In two examples of change, the firm’s implementing “a comprehensive productivity programme” and working towards separating its ice cream business.

Schumacher asserts that Unilever’s on course to meet its 2024 expectations and to become a “higher performing business” over time. Meanwhile City analysts expect normalised earnings to increase by about 9% this year and almost 7% in 2025.

Set against those expectations and with the share price near 4,840p, the forward-looking price-to-earnings (P/E) ratio is just below 19 for 2025. Meanwhile, the anticipated dividend yield is around 3.3%.

I admit that’s not a bargain-bin valuation, but this isn’t a bargain-bin business either.

For me, Unilever’s a potential investment to make for the long term. So I’m watching it closely with a view to pouncing at opportune times when the markets are weak.