Colgate-Palmolive Faces Challenges Despite Strong Market Position

Colgate-Palmolive Company (CL), based in New York, stands as a global leader in the oral hygiene sector. The company produces and distributes a diverse range of household, healthcare, and personal care products. With a market capitalization of $74.5 billion, Colgate operates through three segments: Oral Care, Personal & Home Care, and Pet Nutrition.

Fitting the criteria for ‘large-cap stocks,’ Colgate’s status is attributed to its long-standing history, expansive customer base, and well-established brand presence.

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Recent Stock Performance and Market Comparisons

Colgate-Palmolive reached an all-time high of $109.30 on September 5, 2024, but currently trades at 14.6% below that peak. Over the last three months, CL has seen a modest decline of 1%, outperforming the Dow Jones Industrial Average (DOWI), which fell by 4.6% in the same timeframe.

However, analyzing longer-term performance reveals a more troubling trend. Over the past year, CL stock prices have risen by 7%, but they’ve decreased by 13.5% over the past six months. In contrast, the Dow has gained 10.1% over the past year and 5.5% in six months.

To illustrate this downturn, Colgate’s stock has predominantly traded below its 50-day moving average since early October, and it fell below the 200-day moving average in late October 2024, showing intermittent fluctuations.

Mixed Financial Results Impact Investor Sentiment

Colgate-Palmolive’s latest Q4 results, announced on January 31, led to a 4.6% drop in stock prices. The company reported net sales of $4.9 billion, a decline of 12 basis points year-over-year, falling short of analysts’ expectations by 72 basis points. This disappointing performance raised concerns among investors. Although there was a slight decrease in costs of goods sold (COGS) resulting in gross margin expansion, selling, general, and administrative (SG&A) expenses grew by 5.1% year-over-year to $1.9 billion, contributing to a slight contraction in operating margins and a dip in operating profits to $1.1 billion.

On a positive note, Colgate’s non-GAAP net income rose by 3.5% year-over-year to reach $745 million, and its non-GAAP earnings per share (EPS) of $0.91 surpassed consensus estimates by 2.3%.

In comparison with its peer, Kimberly-Clark Corporation (KMB), which saw a 14.1% increase over the past year and a 3.1% decline in the past six months, Colgate has lagged significantly.

Analyst Outlook and Consensus Rating

A consensus of 23 analysts covering CL stock rates it as a “Moderate Buy.” The mean price target of $98.43 suggests a potential 5.5% upside from current price levels.

On the date of publication, Aditya Sarawgi had no positions in any of the securities mentioned in this article. All information and data here are for informational purposes only. For more details, view the Barchart Disclosure Policy here.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.