Colgate-Palmolive Company
CL
$86.26
-1.38%
Colgate-Palmolive Company is a global consumer staples manufacturer founded in 1806, operating in the Household & Personal Products industry with a portfolio spanning oral care (over 40% of sales), personal care (shampoos, shower gels, deodorants), home care products, and the Hill's Pet Nutrition specialty pet food business, sold in over 200 countries with roughly 70% of revenue generated internationally and nearly half from emerging markets. The company is a defensive blue-chip and share leader in oral care, distinct for its pricing power, global distribution scale, and recession-resistant demand profile, though it operates in mature, slow-growth categories where volume growth is structurally modest. The current investor narrative centers on a rotation trade back into defensive laggards, with Colgate underperforming the S&P 500 over the trailing year (+7.29% vs. SPY +15.01%) despite a solid year-to-date gain of 12.59%, while analysts debate whether input-cost relief, gross margin expansion toward 60%+, and Hill's premium pet nutrition momentum can offset soft volumes and a stretched balance sheet. Recent headlines emphasize a rotation from growth into value and defensive names, framing Colgate as a potential beneficiary of mean-reversion flows even as its relative strength remains negative across most timeframes.…
CL
Colgate-Palmolive Company
$86.26
Investment Opinion: Should I buy CL Today?
The synthesized recommendation is Hold. Colgate is a high-quality defensive staple with a consensus buy rating (recommendation mean 2.05) and an average target price of $98.95, implying 13.1% upside. However, the stock's persistent relative underperformance versus the S&P 500 and a stretched balance sheet warrant caution. The core thesis is that Colgate offers stable income and low volatility, but lacks a near-term catalyst to drive significant outperformance.
Supporting evidence includes: 1) Forward PE of 21.29x, near the low end of its historical range, suggesting limited downside from multiple compression. 2) Revenue growth of 8.41% YoY in Q1 2026, above the historical mid-single-digit norm. 3) Gross margin of 60.59% and operating margin of 21.71%, demonstrating strong pricing power. 4) TTM free cash flow of $3.767 billion, comfortably covering dividends and buybacks. 5) A 2.85% dividend yield, attractive for income investors. Compared to the broader consumer staples sector, Colgate's margins are superior, but its growth is in line with peers.
The biggest risks that could invalidate the thesis are: 1) A slowdown in revenue growth below 5%, which would likely trigger multiple compression. 2) Further deterioration in the balance sheet, such as the current ratio falling below 0.9 or debt-to-equity exceeding 160%. 3) A sustained rotation out of defensive names, leading to continued relative underperformance. The rating would upgrade to Buy if the forward PE compresses below 20x or if revenue growth accelerates above 10% for two consecutive quarters. It would downgrade to Sell if revenue growth turns negative or if free cash flow declines below $3 billion. Relative to its history and peers, CL appears fairly valued, with the forward PE near the low end of its range but the stock lacking a clear catalyst for multiple expansion.
Sign up to view all
CL 12-Month Price Forecast
Colgate presents a balanced risk/reward profile. The forward PE of 21.29x is near the low end of its historical range, suggesting limited downside from multiple compression, while the 8.41% revenue growth in Q1 2026 is encouraging. However, the stretched balance sheet and persistent relative underperformance versus the S&P 500 are significant concerns. The analyst consensus is moderately bullish, but the wide target range ($87-$110) reflects uncertainty. I would upgrade to bullish if revenue growth sustains above 8% for two more quarters and the current ratio improves above 1.0. I would downgrade to bearish if revenue growth falls below 4% or if free cash flow declines below $3 billion.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Colgate-Palmolive Company's 12-month outlook, with a consensus price target around $98.95 and implied upside of +14.7% versus the current price.
Average Target
$98.95
0 analysts
Implied Upside
+14.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$87 - $110
Analyst target range
Colgate is covered by 20 analysts with a consensus recommendation of "buy" (recommendation mean of 2.05 on a 1-5 scale where lower is more bullish), and the average target price of $98.95 implies +13.1% upside from the current price of $87.47. The consensus leans moderately bullish, supported by the forward EPS estimate of $4.79 and estimated revenue of $24.18 billion, and the institutional ratings list shows no downgrades in 2026, with Rothschild & Co upgrading from Neutral to Buy in April and firms including Citigroup, UBS, RBC, and JP Morgan maintaining Buy/Overweight/Outperform stances through July. The absence of any Sell ratings and the clustering of targets above the current price suggest the Street views the recent pullback as a buying opportunity rather than the start of a fundamental breakdown.
The target range spans $87.00 to $110.00, a spread of $23.00 or roughly 26% of the current price, which signals moderate-to-high uncertainty about the pace of the earnings recovery and volume trends. The high target of $110.00 implies roughly +25.8% upside and likely assumes multiple expansion toward the mid-20s forward PE, accelerating Hill's Pet Nutrition growth, and successful margin defense; the low target of $87.00 is essentially at the current price and prices in flat volumes, persistent FX headwinds from ~70% international exposure, and no multiple re-rating. The tight clustering of recent ratings (no downgrades, one upgrade) and the 20-analyst coverage depth indicate strong institutional interest and efficient price discovery, but the wide target spread means position sizing should account for the possibility that the stock simply trades sideways near the low end of the range.
Bulls vs Bears: CL Investment Factors
The bull case for Colgate rests on its forward PE near the low end of its historical range, robust 60%+ gross margins, accelerating revenue growth, and a consensus buy rating with 13.1% upside. However, the bear case is equally compelling: a stretched balance sheet with debt-to-equity of 147.93%, persistent relative underperformance versus the S&P 500, and a high payout ratio that limits financial flexibility. Currently, the bear evidence appears slightly stronger given the stock's negative relative strength across all timeframes and the lack of a near-term catalyst to reverse the trend. The single most important tension is whether the recent revenue acceleration to 8.41% YoY can be sustained; if it can, the forward PE of 21.29x will prove too low, but if volume growth stalls, the stock could retest its 52-week low of $74.55.
Bullish
- Forward PE near historical low: The forward PE of 21.29x sits near the bottom of Colgate's historical 20.7x-41.8x range, implying the market is pricing in modest expectations. With forward EPS of $4.79 and a 2.85% dividend yield, the risk/reward for income-focused investors is favorable if the earnings recovery materializes.
- Gross margin above 60% for five quarters: Q1 2026 gross margin of 60.59% marks the fifth consecutive quarter above 60%, demonstrating pricing power that is offsetting input-cost pressure. This stability supports the 21.71% operating margin and 12.13% net margin, which are robust for a mature consumer staples company.
- Revenue growth accelerating to 8.41% YoY: Q1 2026 revenue of $5.324 billion grew 8.41% year-over-year, well above Colgate's historical mid-single-digit norm. The sequential progression from $4.911 billion in Q1 2025 reflects both pricing and mix benefits, with Hill's Pet Nutrition contributing $1.196 billion, or 22.9% of quarterly revenue.
- Analyst consensus buy with 13.1% upside: 20 analysts rate CL a buy (recommendation mean 2.05), with an average target price of $98.95 implying 13.1% upside from $87.47. The absence of any Sell ratings and Rothschild & Co's upgrade to Buy in April suggest the Street views the recent pullback as a buying opportunity.
Bearish
- Stretched balance sheet with high leverage: Debt-to-equity of 147.93% and a current ratio of 0.995 (below 1.0) indicate limited near-term liquidity cushion. The quick ratio of 0.64 further signals reliance on steady cash generation to service obligations, leaving little room for operational missteps.
- Relative underperformance versus S&P 500: CL has lagged the S&P 500 across every measured window, including -14.68% over 6 months and -7.72% over 1 year, despite a positive YTD gain of 12.59%. This persistent relative weakness suggests the market is favoring growth over defensive staples, limiting near-term upside.
- High dividend payout ratio limits flexibility: The payout ratio of 85.51% leaves little retained-cash buffer for reinvestment or debt reduction. With a 2.85% dividend yield, the dividend is secure but unlikely to grow aggressively, capping total return potential for income investors.
- Volume growth remains structurally modest: Colgate operates in mature categories where volume growth is inherently slow, and the 8.41% revenue growth is largely price/mix driven. If pricing power erodes due to competitive pressures or consumer trade-down, revenue growth could quickly decelerate to low single digits.
CL Technical Analysis
Colgate is in a broad, range-bound recovery rather than a sustained trend, with the current price of $87.47 sitting roughly 46.5% above the 52-week low of $74.55 and about 11.9% below the 52-week high of $99.33, placing it near the middle of its 52-week range. The 1-year price change of +7.29% confirms a modest uptrend, but the stock has spent the past six months oscillating between the high-$80s and mid-$90s, suggesting consolidation rather than directional conviction. At this positioning, the stock is neither overextended nor a falling knife, but the failure to reclaim the $95-$99 zone keeps the longer-term trend technically neutral-to-constructive at best.
Short-term momentum has deteriorated: the 1-month change of -3.74% and 3-month change of -2.25% both conflict with the positive 1-year and YTD (+12.59%) trends, signaling a deceleration or temporary pullback within the larger recovery. Relative strength is negative across every measured window, including -2.78% versus SPY over 1 month and -14.68% over 6 months, indicating Colgate is lagging the market even as it grinds higher in absolute terms. The 6-month change of +2.76% versus SPY's +17.44% underscores this underperformance, and with a short ratio of 3.96 days-to-cover, there is no meaningful short-squeeze fuel to catalyze a sharp reversal.
Key technical support rests at the 52-week low of $74.55, with intermediate support near the $85-$86 area where the stock repeatedly found buyers in April and September; resistance sits at the 52-week high of $99.33, with a secondary ceiling around $95 where the July rally stalled. A breakout above $99.33 would confirm a new leg higher and likely draw momentum buyers, while a breakdown below $85 would threaten the recovery structure and open the door toward the $74.55 low. The beta of 0.323 is the critical risk-management input: Colgate is roughly 68% less volatile than the market, making it a low-beta defensive holding that offers downside cushioning but also limits upside torque, and the max drawdown of -17.48% reflects that muted volatility profile.
Beta
0.32
0.32x market volatility
Max Drawdown
-17.5%
Largest decline past year
52-Week Range
$75-$99
Price range past year
Annual Return
+6.3%
Cumulative gain past year
| Period | CL Return | S&P 500 |
|---|---|---|
| 1m | -5.3% | +1.0% |
| 3m | -5.7% | +5.4% |
| 6m | +0.9% | +17.8% |
| 1y | +6.3% | +16.5% |
| ytd | +11.0% | +13.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
CL Fundamental Analysis
Colgate's revenue trajectory is modestly re-accelerating, with Q1 2026 revenue of $5.324 billion growing 8.41% year-over-year, a notable improvement from the roughly flat-to-low-single-digit growth seen through 2025 when quarterly revenue ranged from $5.11 billion to $5.23 billion. The sequential progression from $4.911 billion in Q1 2025 to $5.324 billion in Q1 2026 reflects both pricing and mix benefits, while segment data shows Oral, Personal and Home Care at $4.034 billion and Pet Nutrition at $1.196 billion, meaning Hill's contributes roughly 22.9% of the quarter's revenue and remains the higher-growth, higher-margin engine. The 8.41% YoY growth rate is above Colgate's historical mid-single-digit norm, implying the investment case now hinges on sustaining this acceleration rather than merely defending share.
Profitability is robust and stable, with Q1 2026 net income of $646 million on a 12.13% net margin and gross profit of $3.226 billion representing a 60.59% gross margin, consistent with the 60.15%-60.59% range seen across the prior four quarters. Operating income of $1.156 billion equates to a 21.71% operating margin, and the gross margin has held above 60% for five consecutive quarters, indicating pricing power is offsetting input-cost pressure. The one blemish is Q4 2025, when a $970 million other-income/expense swing drove a net loss of $37 million and a -0.71% net margin, but this was a non-operating charge rather than a deterioration in the core business, which still generated $1.077 billion of operating income that quarter.
Balance sheet health is the key concern: debt-to-equity stands at 147.93%, the current ratio is 0.995 (below 1.0), and the quick ratio of 0.64 signals limited near-term liquidity cushion, meaning Colgate relies on steady cash generation to service obligations. Free cash flow remains strong at $3.767 billion TTM, with Q1 2026 free cash flow of $609 million and operating cash flow of $747 million, comfortably covering the $417 million of dividends paid and $306 million of buybacks, though the dividend payout ratio of 85.51% leaves little retained-cash buffer. ROE of 39.48% and ROA of 15.84% are exceptional, but they are flattered by a very small equity base (reflected in the 1,183x price-to-book ratio), so the more meaningful signal is the 21.3% operating margin and the $3.77 billion FCF, which together suggest the company can fund its dividend and modest capex internally without new equity issuance.
Quarterly Revenue
$5.3B
2026-03
Revenue YoY Growth
+8.4%
YoY Comparison
Gross Margin
60.6%
Latest Quarter
Free Cash Flow
$3.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is CL Overvalued?
Because Colgate is solidly profitable with trailing EPS of $0.033 (distorted by the Q4 2025 charge) and forward EPS estimates of $4.79, the PE ratio is the appropriate primary metric; the trailing PE of 29.93x versus a forward PE of 21.29x implies the market expects a sharp earnings recovery, with the 8.6-point gap reflecting the normalization of the Q4 2025 non-operating charge and mid-single-digit earnings growth. The forward PE of 21.29x is the more economically meaningful figure given the trailing number's distortion, and it sits at a modest premium to the broader consumer staples sector, which typically trades in the high-teens to low-20s.
On peer-relative terms, Colgate's PS ratio of 3.14x and EV/EBITDA of 17.85x are reasonable for a defensive staple with 60%+ gross margins and 21%+ operating margins, though the PB ratio of 1,183x is not analytically useful due to the company's minimal book equity. The PEG ratio of -1.19 is negative and therefore meaningless as a valuation signal because it is derived from the distorted trailing earnings base; investors should instead anchor on the forward PE of 21.29x and the 2.85% dividend yield, which together frame Colgate as a fairly valued, income-oriented defensive name rather than a deep-value or high-growth opportunity. The premium to the sector is justified by Colgate's superior margins and global brand strength, but the 85.51% payout ratio limits the valuation multiple's upside.
Historically, Colgate's PE has ranged from roughly 20.7x to 41.8x over the past several years, with the current forward PE of 21.29x sitting near the low end of that band and the trailing PE of 29.93x in the middle. The PS ratio of 3.14x is dramatically below the 12x-16x PS readings recorded in 2024-2025 historical data, though that discrepancy likely reflects a change in the data's share-count or revenue basis rather than a true 75% de-rating, so it should be treated with caution. On balance, the forward earnings multiple near the bottom of its historical range suggests the market is pricing in modest expectations, offering a reasonable entry point for income-focused investors if the earnings recovery materializes.
PE
29.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 21x~32x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
17.8x
Enterprise Value Multiple
Investment Risk Disclosure
Colgate's financial risks are primarily balance-sheet related. The debt-to-equity ratio of 147.93% and a current ratio of 0.995 indicate that current liabilities exceed current assets, leaving limited liquidity cushion. The quick ratio of 0.64 further highlights reliance on inventory and steady cash generation to meet short-term obligations. While TTM free cash flow of $3.767 billion comfortably covers the $417 million dividend and $306 million buyback, the 85.51% payout ratio leaves little retained cash for debt reduction or unexpected expenses. Additionally, the Q4 2025 net loss of $37 million, driven by a $970 million non-operating charge, demonstrates how a single charge can wipe out quarterly profitability, though the core operating income of $1.077 billion that quarter remained solid.
Market and competitive risks center on valuation compression and relative underperformance. CL trades at a forward PE of 21.29x, a modest premium to the consumer staples sector's high-teens to low-20s range, justified by superior margins but vulnerable if growth slows. The stock has underperformed the S&P 500 by 14.68% over 6 months and 7.72% over 1 year, reflecting a market preference for growth over defensive names. With a beta of 0.323, CL is less volatile than the market, but this also limits upside torque. The recent news highlighting a rotation from growth to value could benefit Colgate, but if the rotation reverses, the stock could see further relative weakness. Competitive pressures in oral care and pet nutrition, particularly from private-label brands and premium entrants, could erode Colgate's pricing power.
In a worst-case scenario, a combination of slowing revenue growth, margin compression, and multiple de-rating could drive CL toward its 52-week low of $74.55, representing a 14.8% decline from the current price of $87.47. If the analyst low target of $87.00 is breached and the stock breaks below the $85 support level, the next stop would be the $74.55 low, implying a total downside of approximately 14.8%. A more severe scenario, such as a global recession reducing consumer spending and triggering FX headwinds from Colgate's 70% international exposure, could push the stock below its historical max drawdown of -17.48%, potentially to the low $70s. Investors should note that the low beta of 0.323 provides some cushion, but it does not eliminate downside risk in a broad market selloff.
FAQ
The key risks are ranked by severity: 1) Financial risk: Debt-to-equity of 147.93% and a current ratio below 1.0 (0.995) indicate a stretched balance sheet with limited liquidity cushion. 2) Growth risk: Revenue growth could decelerate from 8.41% to low single digits if pricing power erodes or volumes decline, leading to multiple compression. 3) Market risk: CL has underperformed the S&P 500 by 14.68% over 6 months, and a sustained rotation out of defensive names could exacerbate relative weakness. 4) Company-specific risk: The 85.51% payout ratio leaves little retained cash for reinvestment or debt reduction, and a single non-operating charge (like the $970 million in Q4 2025) can wipe out quarterly profits.
The 12-month forecast has three scenarios: Bull case (25% probability) targets $99-$110, assuming revenue growth above 8%, margin expansion, and multiple re-rating. Base case (55% probability) targets $93-$99, assuming mid-single-digit revenue growth and stable margins. Bear case (20% probability) targets $74-$87, assuming revenue deceleration and margin compression. The base case is most likely, with the key assumption being that Colgate maintains 5-7% revenue growth and a 60% gross margin. The analyst average target of $98.95 aligns with the upper end of the base case, implying 13.1% upside.
CL appears fairly valued to slightly undervalued on a forward basis. The forward PE of 21.29x is near the low end of its historical range of 20.7x-41.8x, suggesting the market is not pricing in aggressive growth. The trailing PE of 29.93x is distorted by the Q4 2025 non-operating charge. On a peer-relative basis, the PS ratio of 3.14x and EV/EBITDA of 17.85x are reasonable for a defensive staple with 60%+ gross margins. The 2.85% dividend yield is above the sector average, providing income support. The market appears to expect modest earnings recovery and stable margins, with limited multiple expansion potential.
From a risk/reward perspective, CL is a moderate buy for income-focused investors but less attractive for those seeking growth. The stock trades at $87.47, with a forward PE of 21.29x and a 2.85% dividend yield, and analysts see 13.1% upside to the average target of $98.95. The biggest downside risk is a retest of the 52-week low of $74.55, representing a 14.8% decline, if revenue growth stalls. However, the low beta of 0.323 and strong free cash flow of $3.767 billion provide downside cushioning. It is a good buy for conservative investors with a long-term horizon who prioritize income and stability over capital appreciation.
CL is best suited for long-term investment, with a suggested minimum holding period of 2-3 years. The stock's low beta of 0.323 and stable dividend yield of 2.85% make it a classic defensive holding for income and capital preservation. Short-term trading is less attractive due to the lack of near-term catalysts and the stock's range-bound technical pattern between $85 and $99. The high payout ratio of 85.51% limits dividend growth, but the dividend is secure given the $3.767 billion free cash flow. Long-term investors can benefit from the earnings recovery and potential multiple expansion as the market recognizes the stable cash flows.