COLGATE-PALMOLIVE COMPANY (CL): what the price requires
At today's price, COLGATE-PALMOLIVE COMPANY (CL) is priced for -0.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CL
Headline
| Field | Value |
|---|---|
| Ticker | CL |
| Company | COLGATE-PALMOLIVE COMPANY |
| Current price | $92.78/sh |
| Composition | Oral, Personal and Home Care 77% / Pet Nutrition 23% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 10.6% |
| Operating margin today | 20.4% |
| Margin compression implied | -9.8pp |
| Implied growth | -0.3% |
| Multiple paid | 18x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7pp.
Reconcile: at the x-ray's 9.3% required return this reads ~11.6%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.12σ |
| cohort percentile (of 69 peers) | 41 |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.89x | 3 | expensive |
| Earnings | 2.82x | 4 | expensive |
| Relative | 1.59x | 3 | expensive |
| Growth | 1.17x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
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=13)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $85.59 | 1.08x | yes | FCF base $3.8B, growth 4% (input: historical growth), terminal g 4.0%, WACC 8.4%, 5yr projection |
| DCF Exit Multiple | Growth | $79.38 | 1.17x | yes | Exit EV/EBITDA: 19.2x / 21.2x / 23.2x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $69.63 | 1.33x | yes | P/E 26.13x (blended: static sector reference 22x + trailing (TTM) 36x), scenarios: 21.9x / 26.1x / 30.4x (bear / base = reference held flat / bull), EV/EBITDA 16.16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $28.04 | 3.31x | yes | BV/sh $0.18, ROE (TTM) 1440.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $1855.60 | 0.05x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $60.74 | 1.53x | yes | Rev $20.8B, growth 4% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.6x / 4.2x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $27.93 | 3.32x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.55B × (1−24%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $49.18 | 1.89x | yes | BV $0.18 + 5yr PV of (ROE (TTM) 1440.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $3.23 | 28.72x | yes | √(22.5 × EPS $2.58 × BVPS $0.18) — Graham's conservative floor (excluded from median) |
| EV/EBITDA Relative | Relative | $58.43 | 1.59x | yes | EBITDA $3.83B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $42.38 | 2.19x | yes | FCF $3767.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $40.07 | 2.32x | yes | SBC-adj FCF $3.60B (FCF $3.77B − SBC $0.17B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $2.16 | 42.95x | yes | EPS $2.58 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $0.23 | 403.39x | yes | BV $0.18 × (ROIC 10.9% / WACC 8.4%) (excluded from median) |
| P/Sales Sector | Relative | $51.66 | 1.80x | yes | Revenue $20.80B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $27.89 | 3.33x | yes | EPS $2.58 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $7.6b |
| Net debt / NOPAT (after-tax) | 2.40x |
| Net debt / operating income (pre-tax) | 1.83x |
| Interest coverage | 15.7x |
| Share count CAGR (buyback) | -1.2% |
| Burning cash | no |
Bullet Takeaways
- The price at $89.47 sits above most valuation methods and is reached only by the growth-DCF, the signature of a moat premium. Earnings power value lands at $31.95 and the relative-valuation P/E read at $63.98, both well below the price.
- The moat is global brand strength: Colgate generates roughly 45% of sales from emerging markets and holds a leading position in oral care, paired with the Hill's Pet Nutrition franchise.
- Recent results are steady but pressured: Q1 2026 organic sales grew 2.9% and non-GAAP EPS rose to $0.97, but management cut gross-margin guidance on higher raw-material and packaging costs, and North America organic sales fell 0.5%.
Bull Case
Where the price stands against the methods defines Colgate, and the gap is the price of durability. Only the growth-DCF reaches the $89.47 (June 27, 2026) quote: the DCF exit-multiple lands at $87.98 and the DCF perpetual-growth read at $98.18, both built on the assumption that Colgate keeps compounding modestly forever. Every other family sits below, relative valuation at $63.98, EV/EBITDA relative at $58.43, earnings power value at $31.95. That pattern means the market is paying for the one thing the static methods cannot capture: a consumer-staples moat that has produced reliable cash flow for generations. The reverse-DCF underlines how low the bar is, reading an implied operating-income growth requirement of roughly negative 1%, meaning the price barely needs the business to grow at all.
The moat is global and broad. Colgate sells oral, personal, and home care brands plus Hill's Pet Nutrition, and roughly 45% of net sales come from emerging markets across Latin America, Asia, Africa/Eurasia, and Central Europe (FY2025 10-K, accession 0000021665-26-000006). Oral care is a substantial part of the mix, where Colgate holds leading global toothpaste share, a position built on decades of distribution and brand trust that is extraordinarily hard to dislodge in markets where the Colgate name is synonymous with the category. That geographic diversity reduces exposure to any single market and gives the company a structural growth tailwind from rising emerging-market consumption.
The financial profile is what a staples compounder should look like. A 15.4% operating margin, double-digit return on invested capital, interest coverage above 12x, and free cash flow near $3.8 billion fund a dividend yielding about 2.3% alongside steady buybacks that shrink the share count. Q1 2026 organic sales grew 2.9%, with Hill's up 4.8% excluding the private-label exit, and non-GAAP EPS rose to $0.97 from $0.91. A buyer at $89.47 is paying a reasonable multiple for a defensive, cash-generative global brand portfolio that needs almost no growth to justify the price.
Bear Case
The competition is intensifying in ways that pressure exactly the moat the price pays for. Colgate competes against well-resourced rivals, and its own filing flags that the substantial growth in eCommerce and the use of AI have encouraged new entrants, some selling directly to consumers (FY2025 10-K, accession 0000021665-26-000006). In oral care that means Procter and Gamble's Crest and Oral-B at the premium end, Church and Dwight and a long tail of value brands below, and a rising wave of direct-to-consumer and private-label challengers that the old distribution moat does not block online. When the path to the consumer shifts from the supermarket shelf to the search bar, an incumbent's shelf-space and brand-recognition advantages erode at the margin, and the premium the price assumes gets harder to defend.
Once that disruption framing is set, the margin and growth pressure becomes the concrete concern. Management cut gross-margin guidance for 2026, citing significant increases in raw-material and packaging costs, and the filing concedes that in the current environment its mitigation strategies, the funding-the-growth and productivity programs, may become increasingly difficult to implement (FY2025 10-K, accession 0000021665-26-000006). North America, a core profit market, posted a 0.5% organic sales decline in Q1. Staples earn their premium on stable, expanding margins; when input costs rise and pricing power meets value-conscious consumers and private label, that stability is exactly what is at risk.
The valuation leaves little room for disappointment. The methods anchored to current economics are far below the price: earnings power value at $31.95, the FCF-yield read at $42.38, and the relative P/E at $63.98. The book-based methods are distorted, book value per share is just $0.18 after years of buybacks, so figures like the 1440% return on equity are accounting artifacts rather than signs of value. Net debt sits at about 2.4x operating income, manageable but not trivial for a slow grower.
Valuation
Colgate's valuation X-ray shows the classic staples-premium shape: the price sits above almost every method, and only the growth-DCF reaches it. The DCF exit-multiple lands at $87.98 and the DCF perpetual-growth read at $98.18, bracketing the $89.47 price. Everything anchored to current economics is lower: relative valuation at $63.98, EV/EBITDA relative at $58.43, earnings power value at $31.95, and the FCF-yield capitalization at $42.38. The book-based methods are unreliable here because buybacks have driven book value per share to just $0.18, which produces nonsensical figures like a 389x ROIC-justified P/B; those should be ignored.
The reverse-DCF clarifies what the price assumes. It reads an implied operating-income growth requirement of roughly negative 1%, within the normal range, meaning the price is paying for durability rather than growth.
The bet a buyer makes at $89.47 is that the brand moat and emerging-market exposure keep delivering low-single-digit organic growth while margins hold, in a market where eCommerce, private label, and direct-to-consumer entrants are pressing on the premium. If the moat holds, the price is fair and the band implies modest upside. If competition and input costs keep compressing margins, the earnings-power methods in the $30s to $60s are the gravity, and the price has little cushion.
Catalysts
The Q1 2026 report on May 1 was the most recent catalyst: net sales up 8.4% to $5,324 million on 2.9% organic growth, non-GAAP EPS up to $0.97, and Hill's organic sales up 4.8% excluding the private-label exit. The offsetting news was a cut to gross-margin guidance on higher raw-material and packaging costs, and a 0.5% organic sales decline in North America. Management maintained full-year organic sales guidance of 1% to 4% while flagging margin pressure. The next quarter tests whether the promised second-half North America improvement materializes.
The forward watch items are clear. First, gross margin, the central pressure point, where raw-material and packaging cost inflation prompted the guidance cut and the productivity program's ability to offset it is the swing factor. Second, North America organic sales, the weak spot management expects to improve sequentially. Third, Hill's Pet Nutrition momentum, the higher-growth franchise now past the private-label exit headwind. Fourth, emerging-market volume and pricing, since roughly 45% of sales come from those markets and they carry the structural growth. On capital allocation, the dividend and buyback cadence remain the steady return engine; the dividend yields about 2.3% and the share count keeps shrinking, supporting per-share earnings while the business grows slowly.
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)
- (no filing in the citation store)
- CHD (CHURCH & DWIGHT CO., INC.)
- (no filing in the citation store)
- CLX (CLOROX CO /DE/)
- (no filing in the citation store)
- KVUE (Kenvue Inc.)
- (no filing in the citation store)
- UL (UNILEVER PLC)
- (no filing in the citation store)
- EL (Estee Lauder Companies Inc)
- (no filing in the citation store)
- COTY (COTY INC.)
- (no filing in the citation store)
- HLN (Haleon plc)
- (no filing in the citation store)
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.
- 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.