FTSE 100 incumbent Reckitt (LSE: RKT) was as soon as seen as a no brainer defensive purchase for a lot of buyers.

Issues haven’t been nice not too long ago – extra on that later – so is there a possibility for me to purchase cheaper shares with a view to a restoration towards former glories? Let’s take a better look.

Robust occasions

As a reminder, Reckitt is without doubt one of the largest shopper items companies on the market. With a raft of widespread manufacturers beneath its belt, together with Dettol, Calgon, Air Wick, Durex, Nurofen, and extra, it’s no marvel it’s been a well-liked inventory up to now.

Sadly, latest points have prompted the shares to fall sharply. Over a 12-month interval they’re down 22% from 5,826p, to present ranges of 4,501p.

What’s occurred?

Going again to 2017, the acquisition of child formulation enterprise Mead Johnson Diet for over $16bn was the catalyst for Reckitt’s struggles, in my opinion. In addition to arguably overpaying, Reckitt additionally inherited authorized troubles linked to the agency’s merchandise, which have been argued as being harmful for infants. An Illinois court docket awarded a lady $60m for the demise of her child linked to the usage of Mead Johnson’s Enfamil formulation. The Reckitt share price fell by 15% alone when this occurred.

Shifting ahead, there are nonetheless just a few authorized battles raging on. It appears the ill-fated acquisition has set Reckitt on an undesirable and dear course. I’ll be maintaining a detailed eye on issues.

The opposite facet of the coin

Regardless of this somewhat giant bump within the street, I nonetheless assume Reckitt is a top quality enterprise. As talked about earlier, its widespread manufacturers carry sway with customers the world over. That is one other bonus, as this huge presence might assist enhance earnings and returns.

Subsequent, its resolution – a bit like competitor Unilever – to streamline its model portfolio and concentrate on its best-selling ones, might assist the enterprise recuperate from different points. It’s a sensible transfer, in my eyes.

Moreover, Reckitt continues to look to increase into new territories to develop the enterprise. This might be one other cash spinner that might assist enhance earnings and returns, in addition to restore the harm talked about earlier.

Lastly, the shares at the moment are buying and selling at dirt-cheap ranges, in the event you ask me. A price-to-earnings ratio of near 13 is means beneath a five-year common of over 21. This can be a nice entry level that has tempted me at present. Plus, a dividend yield of 4.4% is attractive. Nonetheless, I do perceive that dividends are by no means assured. Additionally, this increased yield is the results of a share price drop.

What I’m doing now

It’s a difficult name for me to make, if I’m trustworthy. I do imagine there’s a incredible firm in Reckitt. Nonetheless, I’m not oblivious to the latest challenges, and what the poor resolution of this acquisition has completed to the enterprise and its outlook.

Finally, ongoing lawsuits and the prospect of thousands and thousands, or much more, in fines and litigation to return doesn’t sit nicely with me. I’m not planning on shopping for any shares proper now however will maintain a detailed eye on developments. I could revisit my place quickly.