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Colgate Palmolive (CL)
#1
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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#2
According to FAST Graphs, the average PE over the last 10 years is 19.4, so it appears the company is about 10-15% overvalued if you use a 22 PE based on an estimate of $3 for 2014 earnings.

   

CL has a great track record, but with just a 2.2% yield is priced a little too rich for my blood. It would have to drop to $57 (2.5% yield) or so for me to start getting interested.
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#3
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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#4
(04-14-2014, 03:58 PM)earthtodan Wrote: 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.

If they can pull of the estimated $2.99 for 2014, and then build on that in subsequent years, then that would be great earnings movement that would set the stage for increased dividend jumps in the future. $2.99 for 2014 would be a single-year increase in EPS of about 24%, by my count.
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#5
I like Colgate and have been waiting for an entry to buy the stock. I will wait as long as it takes. There are just better things out there to buy right now I think.

Their DRIP program allows one to average in slowly, but I do not like the fees involved. Pasted below are a summary of the fees in case anyone is interested.

Initial Setup Fee: $10.00
Cash Purchase Fee: $2.50
Ongoing Automatic Investment Fee: $1.00
Purchase Processing Fee (per share): $0.03
Dividend Reinvestment Fee: 5% of amount reinvested up to a maximum of $1.25

Their transfer agent is computershare.

Anyways I've been watching this one for a while, just waitingSmile
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#6
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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#7
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...
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#8
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.
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#9
(07-22-2017, 01:04 PM)crimsonghost747 Wrote: 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.

CL is one that I've never bought because I've always felt it was too expensive and would be impacted by generic brands.
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