HomeMost PopularInvestingThe Better Pick: Colgate-Palmolive Stock vs. Marriott Stock

The Better Pick: Colgate-Palmolive Stock vs. Marriott Stock

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When considering investment picks, it’s important to compare stocks that have similar market capitalization and operating income within the parameters that suit an investment style. With a market capitalization of around $58 billion and operating income of about $3.5 billion to $4.0 billion, both Colgate-Palmolive (NYSE: CL) and Marriott (NASDAQ: MAR) stocks fit this comparison. Although they operate in different sectors, we believe that Colgate-Palmolive stock is a better pick based on its prospects and valuation.

Colgate-Palmolive vs. Marriott: A Closer Look

Colgate-Palmolive is a leading manufacturer and distributor of household, health care, personal care, and veterinary products in global markets. It derives around 45% of its revenue from oral care products. On the other hand, Marriott benefits from a robust travel and leisure demand, with a strong presence in Asia, particularly China.

1. Revenue Growth Comparison

Marriott has demonstrated a better revenue growth rate compared to Colgate-Palmolive, with an average annual growth rate of 10.5% in the last three years, compared to 4.6% for Colgate-Palmolive. This can be attributed to the strong occupancy and average room rate growth that Marriott has experienced, particularly in its operations in Asia.

2. Profitability Comparison

Marriott also has an edge in terms of profitability. Its operating margin has increased from 8.6% to 16.8% over the past few years, while Colgate-Palmolive’s operating margin has declined from 21.0% to 14.8%. However, it’s worth noting that Colgate-Palmolive has a better financial position with lower debt and a higher cash cushion.

3. Valuation Comparison

When comparing current valuation multiples to historical averages, Colgate-Palmolive fares better. Marriott’s stock currently trades at 2.6x trailing revenues, aligning with its last five-year average of 2.7x. On the other hand, Colgate-Palmolive stock trades at 3.1x trailing revenues, lower than its historical average of 3.9x.

Future Outlook and Conclusion

While Marriott has delivered better stock returns this year, Colgate-Palmolive stock has the potential to offer better returns over the next three years. With its current valuation trading below its historical average and a better financial position, Colgate-Palmolive appears to be a more promising investment option.

It’s important to note that investing involves risks, and there may be better opportunities beyond Colgate-Palmolive stock. However, based on our analysis, we believe that Colgate-Palmolive is a better pick compared to Marriott.

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

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