Colgate-Palmolive (CL): Reassessing Valuation After RBC’s Upgrade to Outperform

Colgate-Palmolive (CL) is back on traders radar after RBC Capital bumped the stock to an outperform rating, arguing that consistent organic growth and solid execution could support a gradual sentiment reset.

See our latest analysis for Colgate-Palmolive.

That upgrade comes after a tough stretch, with the year to date share price return sitting around negative 13 percent and the 1 year total shareholder return near negative 14 percent. However, a positive 3 year total shareholder return just above 8 percent suggests longer term momentum is soft rather than broken.

If Colgate-Palmolive's reset in sentiment has you rethinking defensives, it might also be a good moment to explore other resilient household and healthcare names using healthcare stocks.

With shares trading at a double digit discount to analyst targets and a sizeable gap to some intrinsic value estimates, the key question now is whether Colgate-Palmolive is genuinely mispriced or if markets are already baking in that steady growth.

Most Popular Narrative Narrative: 10.2% Undervalued

With Colgate-Palmolive last closing at $78.34 against a narrative fair value of $87.21, the story hinges on steady, compounding earnings power rather than a quick rebound.

Analysts expect earnings to reach $3.5 billion (and earnings per share of $4.43) by about September 2028, up from $2.9 billion today. In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.1x on those 2028 earnings, up from 23.4x today.

Read the complete narrative.

Want to see what is driving that higher projected earnings base and richer multiple expectations, typically reserved for sectors with faster historical expansion? Curious which specific growth and margin assumptions must play out to close the gap between today price and that projected value? The full narrative unpacks the exact revenue trajectory, profitability lift, and valuation reset behind this fair value estimate.

Result: Fair Value of $87.21 (UNDERVALUED)

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

However, persisting consumer caution in key markets and elevated raw material costs could easily derail those margin gains and temper the expected earnings recovery.

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

Another View: Market Ratios Flash Caution

While narrative fair value points to upside, the market multiple picture is more restrained. Colgate-Palmolive trades on a P/E of 21.7x, above both peers at 19.9x and the industry at 17.4x, and above its fair ratio of 19.5x, hinting at valuation risk rather than a bargain. Which lens do you trust more?

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

Build Your Own Colgate-Palmolive Narrative

If you are not fully convinced by this view, or would rather dig into the numbers yourself, you can build a custom narrative in just a few minutes, starting with 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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