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Colgate-Palmolive Co CL

Morningstar Rating
$86.00 +0.69 (0.81%)
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Company Report

Colgate Earnings: Stepped-Up Advertising Spending Buoys Sales, With More Investments in the Cards

Despite facing muted levels of consumer spending around the world and geopolitical volatility, wide-moat Colgate evidenced its brand prowess in the fourth quarter, chalking up 7% organic sales growth (on top of 9% growth a year ago) and a 400-basis-point spike in gross margin to 59.6%. Impressively, Colgate was able to build on its already leading position in the global toothpaste aisle, with its market share expanding to 41% (as cited by the firm), up from around 40% a year ago. And even in its largest market, Latin America, where it generates nearly one quarter of its total sales base, Colgate drove a whopping 16.5% increase in organic sales on a near-balanced contribution from price (up 8.5%) and volume (8%). In our view, this gives credence to its stout brand positioning.

Price vs Fair Value

CL is trading at a 12% premium.
Price
$86.00
Fair Value
$58.00
Uncertainty
Low
1-Star Price
$19.46
5-Star Price
$81.70
Economic Moat
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Capital Allocation
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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
$85.31
Day Range
$84.4586.00
52-Week Range
$67.6286.14
Bid/Ask
$85.55 / $86.10
Market Cap
$70.79 Bil
Volume/Avg
20 / 4.6 Mil

Key Statistics

Price/Earnings (Normalized)
26.74
Price/Sales
3.57
Dividend Yield (Trailing)
2.23%
Dividend Yield (Forward)
2.23%
Total Yield
3.83%

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
PG
UL
Price/Earnings (Normalized)
26.7424.3318.25
Price/Book Value
113.187.676.25
Price/Sales
3.574.591.96
Price/Cash Flow
21.1019.2215.18
Price/Earnings
CL
PG
UL

Financial Strength

Metric
CL
PG
UL
Quick Ratio
0.540.400.57
Current Ratio
1.110.640.79
Interest Coverage
12.6320.6612.41
Quick Ratio
CL
PG
UL

Profitability

Metric
CL
PG
UL
Return on Assets (Normalized)
16.64%13.58%8.29%
Return on Equity (Normalized)
1,440.39%35.76%34.21%
Return on Invested Capital (Normalized)
29.77%20.36%13.37%
Return on Assets
CL
PG
UL
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