Colgate-Palmolive Co (CL, Financial) has recently seen a daily gain of 2.36%, despite a 3-month loss of -1.29%. With an Earnings Per Share (EPS) (EPS) of 1.8, the question arises: is the stock modestly undervalued? This article aims to answer this question through a comprehensive valuation analysis of Colgate-Palmolive Co (CL). We invite you to read on for a deeper understanding of the company's value.
Company Overview
Founded in 1806, Colgate-Palmolive Co has evolved into a leading global consumer product company. Apart from its renowned oral care line, the firm also manufactures shampoos, shower gels, deodorants, and home care products that are sold in over 200 countries. Approximately 70% of its total sales base comes from international markets, with around 45% from emerging regions. Colgate-Palmolive Co also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers.
With a current stock price of $74.03, Colgate-Palmolive Co has a market cap of $61.20 billion. Our analysis suggests that the stock appears to be modestly undervalued, with a GF Value of $86.61.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, computed considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line denotes the stock's ideal fair trading value.
Our analysis suggests that Colgate-Palmolive Co (CL, Financial) appears to be modestly undervalued. This implies that the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength Analysis
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must assess a company's financial strength before deciding to purchase shares. Colgate-Palmolive Co has a cash-to-debt ratio of 0.09, ranking it worse than 79.49% of 1794 companies in the Consumer Packaged Goods industry. The overall financial strength of Colgate-Palmolive Co is fair, with a score of 5 out of 10.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. Colgate-Palmolive Co has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $18.70 billion and Earnings Per Share (EPS) of $1.8. Its operating margin is 19.76%, which ranks better than 92.1% of 1810 companies in the Consumer Packaged Goods industry. Overall, the profitability of Colgate-Palmolive Co is ranked 8 out of 10, indicating strong profitability.
Growth is a crucial factor in the valuation of a company. Colgate-Palmolive Co's 3-year average revenue growth rate is worse than 53.24% of 1713 companies in the Consumer Packaged Goods industry. Colgate-Palmolive Co's 3-year average EBITDA growth rate is -4.8%, which ranks worse than 68.71% of 1515 companies in the Consumer Packaged Goods industry.
ROIC Vs WACC
Another way to assess the profitability of a company is to compare its return on invested capital (ROIC) and the weighted average cost of capital (WACC). For the past 12 months, Colgate-Palmolive Co's ROIC is 22.91, and its cost of capital is 6.04.
Conclusion
In conclusion, the stock of Colgate-Palmolive Co (CL, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 68.71% of 1515 companies in the Consumer Packaged Goods industry. To learn more about Colgate-Palmolive Co stock, you can check out its 30-Year Financials here.
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