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Colgate-Palmolive Co CL

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Morningstar’s Analysis

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Despite Decaying Margins, We Think Colgate's Competitive Prowess Is Firm; Shares Heated

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

We see little in wide-moat Colgate’s second quarter to warrant altering our $72 fair value estimate or long-term forecast (3%-4% sales growth each year and 200 basis points of operating margin expansion over fiscal 2020 to the mid-20s by the end of our 10-year forecast), even after incorporating time value and Morningstar’s forecast for an increase in the U.S. corporate tax rate from 2022 onward, which largely offset. And despite a mid-single-digit pullback in the shares on the print, we don’t think investors should add the stock to their shopping carts, given it trades at more than a 10% premium to our intrinsic valuation.

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Company Profile

Business Description

Since its founding in 1806, Colgate-Palmolive has grown to become a leading global consumer product company. In addition to its namesake oral care line, the firm manufactures shampoos, shower gels, deodorants, and home care products that are sold in over 200 countries around the world (international sales account for about 75% of its consolidated total, including approximately 50% from emerging regions). It also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers.

300 Park Avenue
New York, NY, 10022-7499
T +1 212 310-2000
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 34,200