Opinions
Paul Harris, CFA
Colgate Palmolive
CL-N
WEAK BUY
Dec 31, 2014
Stock price when the opinion was issued
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Probably one of the better staple companies. In July it had a big Venezuelan devaluation which resulted in a sharp drop in earnings. This was followed by the currency earnings drag. You are going to probably see some pullbacks and corrections in valuations, but longer-term this is a very good story if you have a multi-year view on the company.
He is avoiding staples right now. They are trading very, very rich. This company has had a negative earnings revision and are really struggling in some of their core categories with pricing pressures and volume. Not a lot of positive things to say about this. He would be moving on to a different sector, on the view that we will be seeing higher rates. This is not a “Growth” story, it is a “how do we save the ship” story.
Every day, millions of consumers around the world trust our products to care for themselves and the ones they love. colgate-palmolive is a global company serving people in over 200 countries and territories with consumer products that make their lives healthier and more enjoyable. colgate manufactures and markets oral care, personal care, home care and pet nutrition products under such internationally recognized brand names as colgate, palmolive, speed stick, lady speed stick, softsoap, irish spring, protex, sorriso, kolynos, elmex, tom’s of maine, sanex, ajax, axion, fabuloso, soupline and suavitel, as well as hill’s science diet, hill’s prescription diet and hill’s ideal balance. Social media mentions are up 267% in the past 24h.
A consumer brand business. The issue is that 80% of revenue is from outside of North America. 21 times earnings and a good dividend yield. Another issue is that they have good brand loyalty but they are known for their toothpaste. He would prefer they sold off Hills, the veterinary business. This company performs well over the long term so if you have a long time horizon then buy on a pull back. They increase dividends regularly.