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04-14-2014, 02:44 PM
(This post was last modified: 04-14-2014, 02:49 PM by TomK.)
I know that CL is a favorite core DG stock for many, but can someone please explain why it sports a P/E of around 27? That seems above and beyond "paying for quality," especially when PG, KO, JNJ, and the such already sport "premium" P/Es around 20 (give or take).
Does CL's potential international growth warrant that much higher a multiple, or am I missing something else?
Thanks!
Updated to Add:
I guess if you look at forward earnings, which are expected to be around $2.99 for 2014, you get a P/E of *only* about 22, but still, this is appreciably higher than the forward P/Es of its peers.
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I was wondering about this too. Thanks for posting the FAST graph. I want to like CL. The dividend growth rate has been very strong but earnings have not kept pace. With single digit EPS growth it's hard to see how this can continue.
Aside from that, the toothpaste I use is made by GlaxoSmithKline.
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I think it's part based on past performance and part on the expectations of non-US market opportunities. CL has had great returns exceeding PG over many time frames.
It's on my watch list too. However I won't pay over a 20 P/E for anything again (except with dividend reinvestments) and am content to watch and wait. We'll probably have to wait for the next recession before we see it selling at a decent value again. In the meantime, there are other fine companies out there. Noticed UL finally ticked up over a 20 P/E recently. Glad I brought it up to about a full position a month or so ago.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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Thanks for bringing CL to my attention as it now has me considering my position in Church & Dwight (CHD). It too is overvalued and has a low yield. I may have to trade it in for something else...
crimsonghost747
Unregistered
Time to bump this age old one. :p I notice there hasn't been much talk about CL in the past couple of years, yet I've got a feeling that it's still in the portfolio or watchlist of quite a few of us.
What are your current thoughts?
I just don't see how it's a $70+ stock right now. Revenue and EPS are stagnating, even with the share repurchases the EPS just isn't going up, and this is a long term thing already. I bought mine a long time ago so I've been ok with the performance, I think the last chunk I got somewhere around $64 and haven't really felt like buying more since then. But now I'm seriously considering selling after the most recent quarterly report.. I just don't see anything positive happening right now and even at today's close-to-ATH markets I feel like I can find better places for that money.
