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08.04.2021 02:12 PM
Analysis of COLGATE-PALMOLIVE COMPANY (CL) shares

COLGATE-PALMOLIVE COMPANY (CL) is a consumer goods that operates in two product segments: oral, personal, and home care; and pet nutrition. The oral care and personal care products segment operates across five geographic areas, which include North America, Latin America, Europe, Asia-Pacific, and Africa/Eurasia.

The company's oral care products consist of several brands: Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh, and Colgate Optic White. The company also specializes in various categories of personal care products, offering consumers liquid hand soap, which it sells under the brands Palmolive, Protex, and Softsoap. The company manufactures and sells a wide range of home cleaning and dishwashing products, including Palmolive and Ajax dishwashing liquids, Ajax Fabuloso household cleaning products, and Murphy's soap. Through its Hill's Pet Nutrition (Hill's) segment, COLGATE-PALMOLIVE produces food for pets, dogs, and cats.

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The fair value of the company's Enterprise Value (EV) is higher than its capitalization, which is a positive factor. The price-to-earnings (P/E) ratio multiplier is the average for the US market for companies included in the SP 500 index. The dividend paid by the company is 2.37%. The Capitalization / Revenue multiplier is 3.87x. For each dollar invested, an investor will receive only 0.025 in the company's assets. The margin generated by the company is at high values and amounts to 23.7%. Sales are stable, and the forecast is up. The profit is stable, and the forecast is with an increase.

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The company has significant financial stability. Leverage (Debt/EBITDA) is at 1.33x. Free cash flow is $3 billion. Colgate has a high ROA (Net Profit / Asset) utilization rate of 17.4%. The group's high margin level ensures high profit margins. Given the small differences between various analyst estimates, business visibility is good. The sales forecast was recently revised upwards. Over the past year, analysts have regularly revised their forecasts towards growth. The company has no significant fundamental weaknesses.

Considering the company's prospects in relation to the sector, it should be recognized that at a distance of 5 years, the company is lagging behind, but at a distance of two years, it is knocked out in the middle of the rating by adding 20% to its value, which provides investors with a dividend of 12.5% per annum.

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Since 2019, the company's shares have been in an upward trend and are currently recovering from a correction, which makes it possible to purchase assets at an attractive value with a target of $94. At the same time, the profit-to-risk ratio assumes a target of 125, which, according to a rough estimate based on the current trend, the company can achieve by 2026, which, together with the dividends, offers the investor up to 10% of annual income in US dollars. In this case, if the shares fall below the $58 level, the investor should think about fixing losses. Investments are possible for 5% of the amount of liquid capital. Shorter targets of interest to traders should involve shorter stops. The target of $94 implies a stop below the level of $72, but its implementation may occur by the end of this year. An investor or trader should not deceive himself, it is necessary to strictly adhere to the previously adopted plan. Everyone should be careful and follow the rules of money management.

Daniel Adler,
Analytical expert of InstaTrade
© 2007-2025

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