Colgate-Palmolive (CL): Is the Current Valuation a Compelling Opportunity for Investors?

Colgate-Palmolive (CL) has seen its stock deliver mixed returns recently, moving sideways over the past month but down about 13% over the past year. The company’s steady fundamentals have kept investors watching for signs of a turnaround.

See our latest analysis for Colgate-Palmolive.

Colgate-Palmolive’s share price has stayed within a narrow range despite solid revenue and income growth, reflecting a cautious outlook among investors. With a 1-year total shareholder return of -13.2% but a positive 3-year return, momentum is still searching for a new spark.

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But with shares trading below both analyst targets and some intrinsic value estimates, the question remains: is Colgate-Palmolive now undervalued, or is the current price simply reflecting realistic growth expectations?

Most Popular Narrative: 9.1% Undervalued

Colgate-Palmolive’s narrative-based fair value of $87.26 sits above its last close at $79.33, suggesting that the consensus expects upside from current levels. This optimism comes as analysts factor in both lingering headwinds and an expected rebound in organic sales momentum.

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

Read the complete narrative.

What is fueling this attractive narrative? One bold assumption is that Colgate-Palmolive unlocks higher growth by leveraging a surge in global demand and achieving future margins that rival industry leaders. Want a look at the drivers and calculations behind the fair value? Tap in to see which projections make this stock appear compelling.

Result: Fair Value of $87.26 (UNDERVALUED)

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

However, persistent cost pressures or slower demand in key markets could quickly erode Colgate-Palmolive’s margin recovery and challenge these upbeat projections.

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

Another View: Multiples Raise Questions

Looking at valuation from a price-to-earnings perspective, Colgate-Palmolive trades at about 22x earnings, which is more expensive than both its global industry average of 17.5x and peer average of 19.8x. While this premium may reflect brand strength, it introduces extra valuation risk if expectations do not materialize. Could the market re-price CL closer to its peers, or is its global brand truly worth the extra cost?

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

Build Your Own Colgate-Palmolive Narrative

If you see the story differently, or want to dig into the numbers first-hand, you can craft your own perspective in 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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