Colgate Palmolive Co (NYSE: CL)

Sector: Consumer Defensive Industry: Household & Personal Products CIK: 0000021665
Market Cap 64.98 Bn
P/B 75.91
P/E 22.35
P/S 3.23
ROIC (Qtr) 34.93
Div Yield % 3.21
Rev 1y % (Qtr) 1.95
Total Debt (Qtr) 8.42 Bn
Debt/Equity (Qtr) 9.84

About

Colgate-Palmolive Company (CL), a multinational consumer goods company, operates in the oral care, personal care, and pet nutrition industries. Established in 1806, the company's headquarters is located in New York City. Its main business activities involve the development, manufacture, and distribution of a wide range of consumer goods, including toothpaste, toothbrushes, mouthwash, soap, shampoo, and pet food, which are sold in over 200 countries and territories worldwide. These products are marketed under various brand names, such as Colgate,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 4.01B provides robust 0.48x coverage of total debt 8.42B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 4.01B provides exceptional 29.30x coverage of minority interest expenses 137M, showing strong core operations.
  • Operating cash flow of 4.01B provides exceptional 12.50x coverage of interest expenses 321M, showing strong debt service capability.
  • Operating cash flow of 4.01B provides strong 26.06x coverage of stock compensation 154M, indicating sustainable incentive practices.
  • Robust free cash flow of 3.44B exceeds capital expenditure of 571M by 6.03x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 4.01B barely covers its investment activities of (794M), with a coverage ratio of -5.06, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 4.01B provides thin coverage of dividend payments of (1.81B) with a -2.21 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.28B provide limited coverage of acquisition spending of (293M), which is -4.37x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 3.44B represents just -13.04x of debt issuance (264M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High financing cash flow of (3.17B) relative to working capital of (457M), which is 6.95x suggests concerning dependence on external funding for operational needs.

Peer comparison

Companies in the Household & Personal Products
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PG PROCTER & GAMBLE Co 344.56 Bn 20.55 4.06 35.95 Bn
2 UL Unilever Plc 162.92 Bn 24.93 2.32 -
3 CL Colgate Palmolive Co 64.98 Bn 22.35 3.23 8.42 Bn
4 EL Estee Lauder Companies Inc 38.59 Bn -41.50 2.67 9.42 Bn
5 KMB Kimberly Clark Corp 33.56 Bn 17.05 1.86 7.30 Bn
6 KVUE Kenvue Inc. 32.45 Bn 22.64 2.16 8.97 Bn
7 CHD Church & Dwight Co Inc /De/ 20.90 Bn 26.71 3.40 2.20 Bn
8 CLX Clorox Co /De/ 12.14 Bn 15.35 1.79 3.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.14 1.45
EV to Cash from Ops. EV/CFO 18.07 8.11
EV to Debt EV to Debt 8.61 4.77
EV to EBIT EV/EBIT 17.56 14.54
EV to EBITDA EV/EBITDA 14.85 7.35
EV to Free Cash Flow [EV/FCF] EV/FCF 21.06 2.98
EV to Market Cap EV to Market Cap 1.12 -1.59
EV to Revenue EV/Rev 3.61 2.00
Price to Book Value [P/B] P/B 75.91 -7.69
Price to Earnings [P/E] P/E 22.35 16.46
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.60 9.11
Dividend Payout Ratio % Div Payout % (Qtr) 56.80 12.82
Dividend per Basic Share Div per Share (Qtr) 2.06 0.92
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 48.36 11.25
Interest Coverage Int. cover (Qtr) 12.86 2.65
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.52 -96.96
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 3.65 2.29
Dividend Growth (1y) % Div 1y % (Qtr) 4.04 -2.46
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 0.77 -142.06
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 -154.15
EBIT Growth (1y) % EBIT 1y % (Qtr) -0.02 -155.18
EBT Growth (1y) % EBT 1y % (Qtr) 0.53 -206.88
EPS Growth (1y) % EPS 1y % (Qtr) 2.87 -158.13
FCF Growth (1y) % FCF 1y % (Qtr) 1.26 -5.66
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.35 -1.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.15 0.82
Cash Payout Ratio Cash Payout (Qtr) 0.40 0.19
Cash Ratio Cash Ratio (Qtr) 0.20 0.76
Current Ratio Curr Ratio (Qtr) 0.93 2.31
Debt to Equity Ratio Debt/Equity (Qtr) 9.84 -2.80
Interest Cover Ratio Int Coverage (Qtr) 12.86 2.65
Times Interest Earned Times Interest Earned (Qtr) 12.86 2.65
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 23.60 -32.28
EBIT Margin % EBIT Margin % (Qtr) 20.55 -37.76
EBT Margin % EBT Margin % (Qtr) 18.95 -40.89
Gross Margin % Gross Margin % (Qtr) 60.10 50.05
Net Profit Margin % Net Margin % (Qtr) 14.50 -42.94