COLGATE-PALMOLIVE COMPANY (CL): what the price assumes

In the published model solve dated 2026-Q2, anchored at $89.82, COLGATE-PALMOLIVE COMPANY (CL) is priced for +1.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-01 · Source: https://boothcheck.com/report/CL

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=11)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Toothpaste is the franchise: the 10-K reports the company's "share of the global toothpaste market was 41.3% for the full year 2025, down 0.4 share points from full year" 2024, and Oral Care alone accounted for 44% of worldwide net sales.
• The growth is coming from price rather than from selling more: in North America, 2025 volumes fell 1.4% and selling prices fell 0.2%, leaving regional organic sales 1.6% lower on the year.
• Second-quarter results are due July 31, 2026, and the line that decides the year is the volume component of organic sales rather than the headline.

Bull Case

Volumes are falling. That is the fact a bull here has to answer before anything else, and the filing does not soften it: in North America during 2025, volume declined 1.4% and selling prices declined 0.2%, leaving organic sales in the region down 1.6%. Company-wide organic sales rose 1.4%, and the Oral, Personal and Home Care segment got there on net selling price increases of 1.8% against volume declines of 0.3%. A consumer business growing by charging more for the same tubes is telling you something about its demand.

What that account leaves out is what is doing the charging. The 10-K states that the company's "share of the global toothpaste market was 41.3% for the full year 2025", and that Oral Care, Personal Care and Home Care contributed 44%, 17% and 16% of worldwide net sales respectively. Four in ten tubes of toothpaste sold anywhere on earth. That is not a brand position built in a decade or reproducible with a marketing budget, and the ability to raise price nearly two points in a soft year is the visible output of it. Pricing power is easiest to see when volumes are hard, which is precisely when it matters.

The second engine is the one people forget is here. Pet Nutrition is 23% of the business, and it is not a sleepy annex. Operating profit at Hill's rose 10% in 2025 to 1,064 million dollars, reaching 23.1% of that segment's net sales and gaining 160 basis points of margin, driven by gross profit expansion. Pet food has structural characteristics household cleaners do not: veterinary-recommended diets are prescribed rather than browsed, and owners trade down slowly on an animal's health. A quarter of this company is compounding in a category with better demographics than toothpaste.

Set the profitability against the cohort and the picture sharpens. Trailing operating margin runs at 20.4% here. PG earns 23.2% on revenue of 86.72 billion dollars, but CHD converts at 17.3%, KVUE at 17.2%, EL at 2.9% and COTY at negative 0.4%. This is a top-quartile converter in a category where most participants are not, and it does it on a revenue base of 20.80 billion dollars, roughly a quarter of PG's, which means the margin is coming from category concentration rather than from scale alone.

Capital allocation closes the argument. The board authorized repurchases of up to 5 billion dollars under a 2025 program, and in the fourth quarter of 2025 the company bought 5,089,081 shares at an average of 78.54 dollars. The share count has fallen about 1.2% a year over the four years to March 2026. For a business throwing off cash it cannot reinvest at high returns, retiring stock is the honest use of it, and a shrinking denominator quietly converts flat profit into rising profit per share.

Bear Case

The methods do not agree about this company, and the shape of the disagreement is the bear case. Comparisons against peer multiples land well below today's price. The earnings-power approaches, which capitalize today's cash generation at the cost of capital and credit it with no growth at all, land further below still. Only the cash-flow methods reach the price, and it is worth being specific about how they get there. The perpetual-growth version starts from 3.8 billion dollars of free cash flow and carries a four percent rate straight through into the terminal value. That is the whole argument. Pay this price and you are paying for four percent compounding, forever, from a business whose organic sales rose by less than a point and a half last year and whose volumes went backwards.

The conservative methods are probably the more honest read, because the thing they refuse to credit is exactly the thing showing signs of wear. Global toothpaste share fell 0.4 points in 2025 to 41.3%. That is one year and a small number, and a 41% share is still enormous. But share in a mature category is the moat made visible, and moats that erode do so in fractions of a point per year for a long time before anyone calls it erosion.

The pressure has an identifiable source, and the company names it. The 10-K warns that under weaker conditions consumers may "reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to \"private label,\" or lower-priced product offerings." It also flags the other side of the same squeeze: "the consolidation of retail customers globally may further increase our concentration risk." Fewer, larger retailers negotiating against a branded supplier whose volumes are already declining is not a favourable negotiating table, and private label is the credible threat those retailers hold.

North America is where both forces show up first, and it is where the numbers are worst. Regional organic sales fell 1.6% in 2025, driven by the United States, with volume down 1.4% and price down 0.2%. Price going backwards in the home market is a different signal from price rising elsewhere. It suggests the pricing lever is not uniformly available, and the segment carrying most of the company's revenue is the one where it is jammed.

What holds the price up is a durability premium, and durability premiums are the most fragile thing in a consumer franchise because they are unwritten. The inversion of today's price is undemanding on its face, requiring roughly flat to slightly declining operating profit over the next five years, but it credits a terminal value that keeps compounding beyond that window. That terminal assumption is the same thing the static methods decline to pay for. If the market stops crediting it, nothing about the current year's earnings needs to change for the multiple to compress toward what the peer-multiple and earnings-power lenses support. The balance sheet will not force that outcome, with interest covered 15.7 times over and no cash burn, but a strong balance sheet has never prevented a re-rating.

Valuation

About 18x company-wide operating income is what the market pays here, and inverting it produces a bar that surprises people who expect a premium consumer name to be demanding. The price implies company-wide operating growth of roughly negative 0.7% a year over five years.

Read that carefully, because it is easy to misread as cheap. It is computed at a 7.3% cost of capital, and it moves fast with that input: each additional percentage point of cost of capital shifts the implied growth requirement by about 6.9 percentage points. The low bar in the near term is possible only because the calculation carries a terminal value beyond the five-year window. The next five years are not what this price is paying for. The decade after them is.

That is why the methods split the way they do. Only the cash-flow approaches reach the price, and they do it by projecting a four percent growth rate into perpetuity from a free cash flow base of 3.8 billion dollars. The peer-multiple lens puts the price about 55% above where it lands, and the earnings-power methods, which capitalize current profit with no growth credited at all, put it about 155% above where they land. When the static frames land far below and only the forward-looking ones reach, the premium being paid is for durability rather than for growth. Nobody is underwriting an acceleration here. They are underwriting permanence.

The operating evidence for permanence is real but not unqualified. Trailing operating margin sits at 20.4%, which is where this business converts revenue better than most of its cohort: CHD at 17.3%, KVUE at 17.2%, EL at 2.9%. Against PG at 23.2% it is a step behind. And against the peer multiple range the price sits in the lower half, which is the part that keeps this from being a straightforward overvaluation story. The market is already paying less per unit of these economics than it pays across the group.

Two filing-sourced inputs anchor the durability question rather than the arithmetic. Global toothpaste share was 41.3% in 2025 and manual toothbrush share was 32.4%, up 0.4 points, per the 10-K; Hill's Pet Nutrition delivered operating profit of 1,064 million dollars at 23.1% of its net sales. Those are the two positions the terminal value rests on, and they are moving in opposite directions.

On the balance sheet, coverage is the number that matters. Interest is covered 15.7 times over, the company is not burning cash, and the 10-K reports access to unused domestic and foreign lines of credit of 3,641 million dollars at the end of 2025, with recent issuance including 600 million euros of ten-year senior notes at a 3.25% fixed coupon. Borrowing costs at that level are what a franchise credit gets, and they are the reason the buyback can run at 5 billion dollars of authorization while the dividend keeps rising. The downside here is a multiple question, not a survival question.

Catalysts

Second-quarter results land on July 31, 2026, with the webcast scheduled a week ahead on July 23, 2026. The first quarter was reported on May 1, 2026, and management held its organic sales and earnings guidance unchanged on that call. Holding guidance in a year when volumes are negative is itself a statement: it says the pricing and cost programs are expected to cover the gap. The July print is the first real test of that.

The analyst community has been marking targets higher through July, and the spread between them is more interesting than any single number. Wells Fargo moved to 95 dollars from 92 on July 8 at Equal Weight and Piper Sandler to 96 dollars from 92 on July 9 at Overweight; on July 16 UBS went to 106 dollars from 100 at Buy, JPMorgan to 104 dollars from 96 at Overweight and Citi to 110 dollars from 105 at Buy; on July 24 Barclays moved to 87 dollars from 80 at Equal Weight. A range that wide across houses looking at the same filings is the durability argument being priced in public: the high end credits the franchise indefinitely, the low end does not.

On capital return, the board declared a quarterly dividend of 53 cents a share on June 11, 2026, payable August 14, 2026. That sits alongside the repurchase authorization of up to 5 billion dollars the board approved under its 2025 program. For a business generating far more cash than it can reinvest at its own returns, the pace of buyback execution in the next two prints is a cleaner signal about management's own read on the price than anything said on the call.

Peer Cohorts (Per Segment, With Filing Citations)

Oral, Personal and Home Care - North America / Oral, Personal and Home Care - Latin America +4 more (reported)

• PG (PROCTER & GAMBLE CO)
• FY2025 10-K: …increase, partially offset by unfavorable foreign exchange. The unit volume increase was due to increases in North America (due to share growth) and Latin America (due to market growth). Organic sales increased mid-single digits due to double-digit growth in Latin America, mid-single-digit growth in Europe and low…
• FY2025 10-K: …are hair care, personal care and skin care. We are a global market leader in the retail hair care market with about 20% global market share primarily behind our Head & Shoulders and Pantene brands. In personal care, we have the number two market share position with about 20% global market share, primarily behind our…
• CHD (CHURCH & DWIGHT CO., INC.)
• FY2025 10-K: IRST RESPONSE® home pregnancy and ovulation test kits; NAIR® depilatories; ORAJEL® oral analgesic; XTRA® laundry detergent; and ZICAM® cold shortening and relief products. Seven of those brands are designated as "power brands" because they compete in large categories, and we believe they have the potential for…
• FY2025 10-K: …in the Consumer Domestic Segment. (2) 2024 results include the VMS non-cash intangible and PP&E impairment charges of $357.1 in SG&A expenses, of which $327.4 was recorded in the Consumer Domestic segment and $29.7 was recorded in the Consumer International segment. Product line revenues for external customers for…
• CLX (CLOROX CO /DE/)
• FY2025 10-K: …the United States. Products within this segment include bags and wraps under the Glad brand; cat litter primarily under the Fresh Step and Scoop Away brands; and grilling products under the Kingsford brand. • Lifestyle consists of food, water-filtration and natural personal care products marketed and sold in the…
• FY2025 10-K: …Clorox, Clorox2, Pine-Sol, Scentiva, Tilex, Liquid-Plumr and Formula 409 brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; and professional food service products under the Hidden Valley brand. • Household consists of bags and wraps, cat litter and grilling…
• KVUE (Kenvue Inc.)
• FY2025 10-K: Care (Digestive Health, Smoking Cessation, Eye Care, and Other) Skin Health and Beauty Face and Body Care Hair, Sun, and Other Essential Health Oral Care Baby Care Other Essential Health (Women's Health, Wound Care, and Other) The Company's product categories as a percentage of Net sales for the fiscal twelve months…
• FY2025 10-K: …value realization. Self Care Segment Self Care Segment Net Sales The Self Care Segment Net sales were $6.4 billion and $6.5 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $149 million, or 2.3%. Excluding the impact of favorable changes in foreign…
• UL (UNILEVER PLC)
• FY2025 20-F: …and confidence in whole-body self-care. Strategic Report Unilever Annual Report on Form 20-F 2025 21 REVIEW OF THE YEAR Premiumising Personal Care We drove strong growth in hard currency, delivered through our Power Brand premiumisation and category-disrupting innovation. Fabian Garcia Business Group President,…
• FY2025 20-F: …90% of turnover. Deodorants grew low single-digit, with positive volume and price, led by strong growth in Dove. The continued success of whole-body deodorants fuelled growth, offset by a volume decline in Latin America amid softer market conditions. Across our other categories, Skin Cleansing grew mid-single digit,…
• EL (Estee Lauder Companies Inc)
• FY2025 10-K: …candles and soaps that are based on a particular fragrance. Hair Care - Our hair care products include shampoos, conditioners, styling products, treatment, finishing sprays and hair color products. Other - The other category includes royalty revenue from our licensing of the TOM FORD trademark to third parties since…
• FY2025 10-K: …offset by an increase in net sales. Partially offsetting the decline in fragrance operating results in fiscal 2025 was lower cost of sales for the product category overall, driven by the aforementioned impacts disclosed in the consolidated gross margin discussion above. Hair Care Reported hair care operating loss…
• COTY (COTY INC.)
• FY2025 10-K: …and behaviors, both on-line and in-store. We have introduced new ways to customize the consumer experience, including using AI-powered tools to provide personalized advice on selecting and using products, and augmented reality tools that invite customers to virtually try products with curated looks, tutorials and…
• FY2025 10-K: …for the Consumer Beauty segment was due to positive performance in the color cosmetics category specifically from Rimmel Manhatta n and Risque , mass fragrance category specifically from David Beckham and Bruno Banani , and the skin and body care categories in Brazil, specifically from Monange, Paixao and Bozzano .…
• HLN (Haleon plc)
• FY2025 20-F: …with for example only around a third of consumers2 using a specialist toothpaste for each condition. Our position We focus on premium, specialist Therapeutic Oral Health with broad geographic presence. Haleon is the global #13 in Sensitivity toothpaste (with Sensodyne), #24 in Gum Health toothpaste (with parodontax),…
• FY2025 20-F: …as reactive treatments, like antacids and laxatives. There is growing consumer demand for Digestive Health solutions, driven by increased awareness of the importance of gut health, as well as the increase in GLP-1 use1 . Our position Haleon is the #12 manufacturer in the global Digestive Health category, driven by…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.