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Colgate-Palmolive Co CL

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Colgate Cleans Up in Q4, but Shares Are Far From a Bargain

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

While headwinds abounded in fiscal 2020 (stemming from COVID-19 and subsequent macro and political angst), Colgate navigated the uncertain landscape quite astutely. With CEO Noel Wallace at the helm, the wide-moat household and personal care operator’s playbook has centered on elevating research, development, and marketing spend (on its core mix, within adjacent categories, and throughout the digital realm) and responding to evolving consumer preferences more expeditiously. The prudence of this course was again evidenced in the fourth quarter, as organic sales shot up 8.5% (the highest quarterly growth number posted in more than 10 years), gross margins edged up 90 basis points to 61.1%, and adjusted operating margins shrank 100 basis points to 22.4% (after the firm chalked up a 210-basis-point increase in advertising spend as a percentage of sales).

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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 70% 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 Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 34,200