From Nasdaq: 2024-09-15 23:20:46

Colgate-Palmolive stock (NYSE: CL) has surged 40% since early 2023, reaching over $105 from $75, outpacing the S&P 500’s 45% increase. This growth is attributed to a 26% rise in P/S ratio to 4.4x, with sales climbing from $18 billion to $20 billion, fueled by an 11% sales growth. Operating margin uptick led investors to reward CL stock.

Despite inconsistent returns (2% in 2021, -5% in 2022, 4% in 2023), Colgate-Palmolive is less volatile than the S&P 500. Trefis’ High Quality Portfolio, with 30 stocks, outperformed the S&P each year. Current macroeconomic uncertainties could impact CL’s future performance. Its valuation is forecasted at $101 per share, underlining potential risks.

Colgate-Palmolive’s revenues from Oral, Personal, & Home Care, and Hill’s Pet Nutrition segments drove sales growth. Organically, revenue increased by 9.4% in 2024, mainly from improved pricing, with a projected 6-8% growth expected for the full year. The company’s operating margin rose from 20.1% to 21.7%, showing efficiency in cost management, and a growth in gross margin.

Investors may find Colgate-Palmolive attractive, but with mid-single-digit top-line growth forecasted. Despite positive factors accounted for in the valuation, the slow volume growth is seen as a near-term risk. While the stock seems fairly priced, a cautious approach may be advisable, waiting for potential dips in price.

Peer comparisons can offer insights into how Colgate-Palmolive positions against its industry competitors. Trefis’ Reinforced Value Portfolio has seen robust returns since 2016, showcasing market-beating performances across various metrics.

Read more at Nasdaq: What’s Driving Colgate-Palmolive Stock Higher?