Seeking Alpha
Company Description: Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care and pet nutrition sopcast products in more than 200 countries and territories.
CL is trading at a premium to all four valuations sopcast above. Since CL's tangible book value is not meaningful, a Graham number cannot be calculated. The stock is trading at a 37.5% premium to its calculated fair value of $47.33. CL did not earn any Stars in this section.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
The NPV MMA Diff. of the $462 is below the $500 target I look for in a stock that has increased dividends as long as CL has. If CL grows its dividend at 9.5% per year, it will take 7 years to equal a MMA yielding an estimated 20-year average rate of 3.68%.
Memberships and Peers: CL is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Procter & Gamble Co. ( PG ) with a 3.0% yield, Kimberly-Clark Corporation ( KMB ) with a 3.1% yield and Clorox Corporation ( CLX ) with a 3.1% yield. sopcast
Conclusion: CL did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of one Star. This quantitatively ranks CL as a 1-Star Very Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $63.73 before CL's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. sopcast At that price the stock would yield 2.1%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate sopcast the target $500 NPV MMA Differential, the calculated sopcast rate is 9.7%. This dividend growth rate is higher than the 9.5% used in this analysis, thus providing no margin of safety. CL has a risk rating of 1.75 which classifies it as a Medium risk stock.
Demand for household and personal sopcast care products is generally stable and not affected by changes in the economy. About 80% of CL's sales come from outside the U.S., with over 50% from emerging markets. Unprecedented promotional spending throughout the household sopcast and personal care industry and significant cost inflation has weighed heavily on CL's gross margins. Long-term, CL's stringent focus on cost management help it to manage through future competitive challenges.
Debt to total capital has risen since my January 2013 review to 75% from 68%. Free cash flow payout at 46% is well below my maximum. With a calculated fair value of $47.33, CL is trading at a 34.7% premium. When I combine the above with a current yield well below my minimum, I will continue to stay on the sidelines for now.
Disclaimer: Material presented here is for informational purposes sopcast only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical sopcast information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer sopcast for more information.
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Company Description: Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care and pet nutrition sopcast products in more than 200 countries and territories.
CL is trading at a premium to all four valuations sopcast above. Since CL's tangible book value is not meaningful, a Graham number cannot be calculated. The stock is trading at a 37.5% premium to its calculated fair value of $47.33. CL did not earn any Stars in this section.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
The NPV MMA Diff. of the $462 is below the $500 target I look for in a stock that has increased dividends as long as CL has. If CL grows its dividend at 9.5% per year, it will take 7 years to equal a MMA yielding an estimated 20-year average rate of 3.68%.
Memberships and Peers: CL is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Procter & Gamble Co. ( PG ) with a 3.0% yield, Kimberly-Clark Corporation ( KMB ) with a 3.1% yield and Clorox Corporation ( CLX ) with a 3.1% yield. sopcast
Conclusion: CL did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of one Star. This quantitatively ranks CL as a 1-Star Very Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $63.73 before CL's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. sopcast At that price the stock would yield 2.1%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate sopcast the target $500 NPV MMA Differential, the calculated sopcast rate is 9.7%. This dividend growth rate is higher than the 9.5% used in this analysis, thus providing no margin of safety. CL has a risk rating of 1.75 which classifies it as a Medium risk stock.
Demand for household and personal sopcast care products is generally stable and not affected by changes in the economy. About 80% of CL's sales come from outside the U.S., with over 50% from emerging markets. Unprecedented promotional spending throughout the household sopcast and personal care industry and significant cost inflation has weighed heavily on CL's gross margins. Long-term, CL's stringent focus on cost management help it to manage through future competitive challenges.
Debt to total capital has risen since my January 2013 review to 75% from 68%. Free cash flow payout at 46% is well below my maximum. With a calculated fair value of $47.33, CL is trading at a 34.7% premium. When I combine the above with a current yield well below my minimum, I will continue to stay on the sidelines for now.
Disclaimer: Material presented here is for informational purposes sopcast only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical sopcast information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer sopcast for more information.
Symbol Price % Chg Remove - - - - - - - - - - - - - - - - - - - -
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