With a market cap of around $77 billion, New York-based Colgate-Palmolive Company (CL) is a global leader in the oral care and hygiene market, producing and distributing household, healthcare, and personal care products. Its business is structured into two segments: Oral, Personal, and Home Care, which includes brands like Colgate, Palmolive, and Softsoap; and Pet Nutrition, managed under Hill's Pet Nutrition.
Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Colgate-Palmolive fits this criterion perfectly. CL focuses on innovation in core categories, exploring growth in adjacent markets, and expanding into new channels, emphasizing its Naturals range to meet rising consumer demand for organic ingredients. It markets its products worldwide through traditional and eCommerce retailers, veterinarians, and wholesalers.
However, despite its strong market position, the consumer products maker is down 13.8% from its 52-week high of $109.30, reached in September. Over the past three months, the stock has declined 12.6%, underperforming the broader Nasdaq Composite's ($NASX) nearly 19% return in the same period.
In the long term, CL has increased 18.2% on a YTD basis, lagging behind NASX's 32.3% gain. Moreover, CL’s shares have returned 21.6% over the past 52 weeks, compared to NASX's 40.4% gain over the same time frame.
CL had been trading above its 50-day and 200-day moving averages since last year but fell below the 50-day moving average from October. It has also remained below the 200-day moving average since November, with some recent fluctuations.
Despite reporting better-than-expected Q3 adjusted EPS of $0.91 and revenue of $5 billion, Colgate-Palmolive shares fell 4.1% on Oct. 25 due to concerns about ongoing challenges. Currency headwinds weighed on sales growth, including a 4.4% negative impact from Argentina and Africa/Eurasia. North America’s net sales declined 2.1%, driven by pricing pressures and a shift toward mid-tier products, raising concerns about demand trends in a key market. Additionally, SG&A expenses rose 8.5% year-over-year, exceeding expectations and heightening worries about margin pressures.
Nevertheless, rival Kimberly-Clark Corporation (KMB) has underperformed CL, increasing 10% over the past 52 weeks and 10.9% on a YTD basis.
Despite CL’s underperformance relative to the Nasdaq over the past year, analysts are moderately optimistic, with a consensus rating of "Moderate Buy" from 22 analysts. The mean price target of $106.09 suggests a 12.6% upside potential from current levels.
