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Colgate-Palmolive Co CL

Morningstar Rating
$88.27 −0.18 (0.20%)
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Company Report

Colgate Prudently Boosts Brand Spending in Face of Macro and Competitive Headwinds

While concerns abound around consumers' financial health and ultimately their willingness to pay up for the essential goods in Colgate-Palmolive's portfolio, we think the firm is navigating the uncertain landscape astutely. Under the leadership of CEO Noel Wallace, the firm's strategic focus has centered on elevating research, development, and marketing spending (on its core mix, in adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously, bringing products to market in just 6-12 months in some cases, down from 18-36 months historically. The prudence of this course is evident, as Colgate has chalked up 19 consecutive quarters at or above its 3%-5% long-term organic sales growth target. We attribute these results to a renewed focus on consumer-valued innovation, even that which comes with a higher price, as well as elevated brand spending; the company has spent almost 12% of sales on marketing on average the past three years, 110 basis points above the level directed in 2017-19.

Price vs Fair Value

CL is trading within a range we consider fairly valued.
Price
$88.27
Fair Value
$84.00
Uncertainty
Low
1-Star Price
$73.19
5-Star Price
$12.40
Economic Moat
Dwjm
Capital Allocation
Xqlghldmm

Bulls Say, Bears Say

Bulls

Increased pet adoption (up by midsingle digits in the U.S.) during the pandemic could buoy Colgate's Hill's business over a longer horizon than we anticipate.

Bears

Raw material, labor, and packaging costs are inflating. Margins may be constrained over a longer horizon if Colgate can't extract inefficiencies and/or raise prices to offset these pressures.

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News

Trading Information

Previous Close Price
$88.45
Day Range
$88.0988.98
52-Week Range
$67.6289.36
Bid/Ask
$87.70 / $89.00
Market Cap
$72.66 Bil
Volume/Avg
3.4 Mil / 4.4 Mil

Key Statistics

Price/Earnings (Normalized)
27.33
Price/Sales
3.76
Dividend Yield (Trailing)
2.18%
Dividend Yield (Forward)
2.27%
Total Yield
3.73%

Company Profile

Since its founding in 1806, Colgate-Palmolive has grown to become a leading global consumer product company. In addition to its namesake oralcare line, the firm manufactures shampoos, shower gels, deodorants, and homecare products that are sold in over 200 countries. International accounts for about 70% of its total sales base, including approximately 45% from emerging regions. It also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Core
Total Number of Employees
34,000

Competitors

Valuation

Metric
CL
RKT
PG
Price/Earnings (Normalized)
27.3312.3825.20
Price/Book Value
119.063.877.95
Price/Sales
3.762.254.75
Price/Cash Flow
22.2512.1519.90
Price/Earnings
CL
RKT
PG

Financial Strength

Metric
CL
RKT
PG
Quick Ratio
0.540.350.40
Current Ratio
1.110.540.64
Interest Coverage
12.6311.8820.66
Quick Ratio
CL
RKT
PG

Profitability

Metric
CL
RKT
PG
Return on Assets (Normalized)
16.64%8.53%13.58%
Return on Equity (Normalized)
1,440.39%26.40%35.76%
Return on Invested Capital (Normalized)
29.77%14.13%20.36%
Return on Assets
CL
RKT
PG
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