08-28-2014, 10:46 AM
(08-28-2014, 10:09 AM)TomK Wrote: Can anyone explain to me why CL trades at such a high multiple? I'm just not understanding it. I know it has a huge streak of dividend increases and that it is a reliable dividend paying consumer staple. But other than that, the yield is not that exciting, the earnings have completely stalled, making little progress since about 2009, and the payout ratio has been climbing steadily to support the dividend increases.
So why is it trading at a p/e of 27, when so many other consumer staple dividend growth champs are trading in the 19-22 p/e range? Have I missed some news or some other differentiating factor? What gives?
Thanks.
The PE is only 22 when using expected 2014 earnings of $2.96 and a forward PE of 20 for 2015 estimates of $3.27. I don't know why the Yahoo main page shows a PE of 27. Its still a bit expensive, but not overly so compared to other blue chips.
The 15 year chart on FAST Graphs shows a historical EPS growth rate of 8.8% and an expected growth rate of 9.3% and a normal PE of 21.6 during the period.
I would say the stock is trading right around fair value, probably a bit on the high end of the range. I don't own the stock, but would begin getting interested if it dipped down to the 2.5% yield range, or around $58.