Moderate Growth Potential
Robust Profit Margins
Healthy Net Profit Margin
Strong Interest Coverage
Strong Organic Sales Growth
Improved Brand Health
Strong Cash Flow and Return on Invested Capital
Innovation and Product Relaunch
Investment in Analytics and AI
High Price-to-Earnings Ratio
Excessively High Price-to-Book Ratio
Moderate Return on Equity
Low Current and Quick Ratios
High Debt Levels
Foreign Exchange Headwinds
Private Label Competition
Volatility in Pet Nutrition Business
Market Competition and Pricing Pressure
Colgate-Palmolive demonstrates a strong business model with consistent growth, effective brand management, and solid cash generation. However, challenges such as foreign exchange impacts and competition from private labels pose risks. The future looks promising with innovative product launches and strategic investments in technology, although market volatility remains a concern.
Analysis Date: January 31, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$68.86
Current Market Price: $90.92
IV/P Ratio: 0.76x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-32.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CL
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (25.93)
P/B ratio ≤ 1.5 (353.54)
Current ratio ≥ 2.0 (0.92x)
Long-term debt < Net current assets (-17.52x)
Margin of safety (-32.0%)
CL does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The gross profit margin of 60.50% indicates that the company retains a substantial portion of revenue after accounting for the cost of goods sold, showcasing strong pricing power.
A net profit margin of 14.38% demonstrates effective cost management and profitability, allowing the company to retain a noteworthy portion of its revenues as profit.
While a return on equity of 11.56% is respectable, it may not be sufficient to attract investors seeking higher returns, especially compared to industry peers.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
1156.00%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
4.61%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
60.50%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
14.38%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 25.53 shows that the company can comfortably meet its interest obligations, indicating strong financial stability and cash flow management.
The current ratio of 0.92 and quick ratio of 0.58 both suggest potential liquidity issues, indicating that the company may struggle to cover its short-term liabilities.
A debt-to-equity ratio of 40.15 indicates that the company is heavily reliant on debt financing, which could pose risks during economic downturns.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
15.65x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
0.92x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Colgate-Palmolive achieved high-single-digit organic sales growth for the year, surpassing the long-term target of 3% to 5%. This growth was reflected in consistent volume and pricing increases across all divisions.
The company has increased advertising spending significantly, contributing to improved brand health and market share. There was a notable growth in toothpaste category value share for three consecutive years.
Colgate-Palmolive reported record operating cash flow and return on invested capital, indicating effective management and efficient use of resources.
The company faced significant foreign exchange challenges that impacted gross margin and sales. This remains a concern moving into 2025.
The presence of private label products has negatively impacted volume growth and market share, particularly in segments like Hill's.
The upcoming re-launch of Colgate Total aims to enhance the product's market position and capitalize on consumer trends towards health and prevention.
Colgate-Palmolive is investing in data analytics and AI to improve pricing strategies and revenue growth management, providing a competitive edge.
The pet food segment has experienced volatility, and while there are growth opportunities, overall category growth remains flat.
Increased competition in various markets, especially in India, may challenge pricing strategies and market share gains.