A Look at Colgate-Palmolive’s Valuation Following Earnings Beat and Strategic Growth Updates

Colgate-Palmolive (NYSE:CL) just posted third quarter results that edged past adjusted profit forecasts, even with continued pressures from consumer uncertainty, persistent inflation, and competitive promotional strategies. Management underscored their commitment to innovation and long-term growth.

See our latest analysis for Colgate-Palmolive.

After a tough stretch, Colgate-Palmolive’s share price has shown some resilience recently. It is up 1.27% in the last day and has logged a 3.81% gain over the week, even as the year-to-date share price return sits at -12.24%. Ongoing buybacks, targeted innovation, and the new €600 million bond offering have kept long-term investors focused on the company’s 13.3% total return over three years. However, short-term momentum is still mixed as market headwinds persist.

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With shares showing slight gains and management reiterating a long-term strategy, the key question for investors is whether Colgate-Palmolive’s current valuation offers hidden value or if the market has already priced in the company’s growth prospects.

Most Popular Narrative: 10.5% Undervalued

The latest narrative estimates Colgate-Palmolive’s fair value at $88.84, compared to the last close of $79.47. Here’s a central belief powering that view.

Expansion and premiumization of core oral care lines like Colgate Total, coupled with the roll-out of complementary products across 75 markets, are set to capture increased value from emerging middle-class consumers and rising health and hygiene awareness globally, supporting top-line organic sales acceleration and improved pricing power.

Read the complete narrative.

Curious how global expansion, premium brands, and long-term sales assumptions shape Colgate’s value? One narrative leverages future profit growth for a premium-worthy price. Find out which core projections drive this bold valuation and what numbers are propelling it higher.

Result: Fair Value of $88.84 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent consumer caution in key markets and rising raw material costs could constrain Colgate-Palmolive’s growth and challenge the bullish case.

Find out about the key risks to this Colgate-Palmolive narrative.

Another View: Multiples Suggest a Different Story

While the current fair value estimate paints Colgate-Palmolive as undervalued, a second perspective using valuations based on the price-to-earnings ratio tells a more cautious tale. Colgate-Palmolive's ratio stands at 22x, notably higher than its industry average of 18x and its peer group at 20.2x. Even compared to its fair ratio of 22.5x, there is less headroom and a tighter margin for upside, which means the market could be pricing in most of the upside already. Is the premium justified, or is there less value here than first meets the eye?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Colgate-Palmolive Narrative

If you have your own perspective or prefer to dig into the numbers yourself, crafting a custom narrative takes just a few minutes. Do it your way.

A great starting point for your Colgate-Palmolive research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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