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Colgate Palmolive Co. Has Higher Expected Return Than Procter & Gamble

CLPG Market Cap$70 Bil$395 BilLTM Revenue$17 Bil$77 BilCurrent P/S4.05.0Current P/EBIT19.021.8Expected 3-Year Return2%-6%

(a) P/S = Price to Sales (b) P/EBIT = Price to earnings before interest and taxes

3-Year Return Depends On [1] Revenue Growth [2] P/S

CLPG LTM Revenue$17 Bil$77 Bilx Revenue Growth [1]1.6%1.9%= Revenue In 3 Years$18 Bil$82 Bil x P/S [2]3.94.5 = Market Cap In 3 Years$71 Bil$369 BilMarket Cap Today$70 Bil$395 Bil Expected 3-Year Return2%-6%

(a) Revenue growth is Annual (b) LTM = Last 12 months

(c) We consider P/S because P/EBIT or P/E are prone to fluctuations; Using current and historical P/S as a base, we incorporate profitability

[1] How Much Can Revenue Grow In Next 3 Years

Past revenue growth metrics that form basis of our expectation

CLPG Recent Quarter Growth6.3%5.3%LTM Growth7.3%6.4%Growth During Covid5.0%4.8%Pre-Covid Annual Growth1.1%2.2% Expected Annual Growth1.6%1.9%

(a) LTM = Last 12 months (b) Growth During Covid = Year 2020 growth

(b) Recent quarter growth refers to growth in recent quarter vs the same quarter one year ago, commonly referred to as y-o-y growth

Colgate Palmolive Co. Revenue vs Procter & Gamble Revenue

CL Revenue History & 3Y Forecast (5% cumulative growth)

PG Revenue History & 3Y Forecast (5.8% cumulative growth)

[2] Which P/S Scenarios Make Sense

P/S Scenarios & Corresponding 3-Year Returns (in brackets)

P/S & Return ScenariosCLPG Current4.0 (4.4%)5.0 (3.4%)Expansion4.3 (13%)6.5 (34%)Contraction3.7 (-3.8%)3.5 (-28%)Pre-Covid3.6 (-6%)3.9 (-19%)Historical Average3.9 (1.2%)3.7 (-23%) Scenario Average3.9 (1.7%)4.5 (-6.4%)"Current" refers to ratio as of 12/23/2021

Note: Expansion/contraction considered from current / current('adjusted) P/S levels; NA imples invalid scenario because of extreme unsustainable values

Colgate Palmolive Co. P/S vs Procter & Gamble P/S

CL P/S Ratio History

PG P/S Ratio History

P/S Ratio

Market RatiosCLPG Current P/S4.05.0Current P/EBIT19.021.8

(a) P/S = Price to Sales (b) P/EBIT = Price to earnings before interest and taxes

Revenue Growth & Operating Margin

Financial MetricsCLPG Revenue GrowthLast Q Sequential3.6%7.3%Last Q YoY6.3%5.3%LTM7.3%6.4%Last 3 FY2.2%4.5% MarginsLTM Op Margins21.1%22.9%LTM Margin Change vs Last 3 FY-0.7%5.1%FCF Margin18.3%23.7%

(a) YoY = year-on-year (b) LTM = Last 12 months (c) FY = fiscal year

CL Operating Income PG Operating Income

Financial & Market Risk

Risk MetricsCLPG Financial RiskDebt as % of Equity11.0%8.2%Cash as % of Assets6.0%8.7% Market RiskMax Drawdown Last 3Y0%0%

(a) Last 3Y = Last 3 years

Note On P/S Justification

=> Stock prices deviate from fair value for extended periods of time based on momentum, macro economy, liquidity, and other factors

=> Therefore, our P/S scenarios does not take into account fairness of current values, and we assign equal probability to all scenarios

=> However, relative assessment of P/S in context of growth, margins and risk, can shed light on likelihood of different P/S scenarios

Past Market Return Comparison Vs Benchmarks

20172018201920202021Total [1]AvgBestReturns CL Return15%-21%16%24%-4%26% PG Return9%0%36%11%15%89% S&P 500 Return19%-6%29%16%25%109% Trefis MS Portfolio Return23%-2%34%68%46%294% <---Monthly Win Rates [2] CL Win Rate50%42%67%67%42% 53% PG Win Rate58%67%83%58%67% 67% S&P 500 Win Rate92%67%83%58%75% 75%<---Trefis Portfolio Win Rate89%58%75%58%83% 73% Max Drawdowns [3] CL Max Drawdown-1%-23%-1%-13%-13% -10%<---PG Max Drawdown S&P 500 Max Drawdown-3%-20%-7%-34%-5% -14% Trefis Portfolio Max Drawdown-4%-24%-11%-38%-14% -18% [1] Cumulative total returns since 2017[2] Win Rate = % of calendar months in which monthly returns were positive[3] Max drawdown represents maximum peak-to-trough decline within a year

CL Stock Return PG Stock Return

FAQ

[1] Why Are We Comparing Colgate Palmolive Co. And Procter & Gamble?

We compare stocks which share one or more similar characteristicsThis is because the decision to invest often come down to finding the best stocks within the ambit of certain characteristics that suit an investment styleWe compare Colgate Palmolive Co. vs Procter & Gamble because ,

[2] How Do We Arrive At A Decision?

We favor stocks that offer meaningfully greater expected return in the next 3 yearsThese returns are calculated based on our revenue forecast and Price to Sales Ratio (P/S) scenarios consideredSimilar Price To Sales Ratio (P/S) scenarios are considered for both stocks and each scenario is weighted equally for a given stock

[3] How Do We Forecast Revenue?

We have different methodologies for companies negatively impacted by Covid, and for companies not impacted or positively impacted by CovidDifferent methodologies are essential to capture recovery in case of negative impactFor companies negatively impacted by covid, we consider quarterly revenue recovery trajectory to forecast recovery to pre-covid revenue run rate, and beyond recovery point, we apply average annual growth observed in 3 years prior to covid to simulate return to normal conditionsFor companies registering positive revenue growth during covid, we consider average annual growth prior to covid with certain weightage to growth during covid and last 12 months

[4] Can I See More Such Comparisons For Colgate Palmolive Co. And Procter & Gamble Peers

Here are some comparisons that you may find useful for Colgate Palmolive Co. and Procter & GambleColgate Palmolive Co. vs Johnson & Johnson: Industry Peers, But Johnson & Johnson Is A Better BetColgate Palmolive Co. vs Kimberly Clark Corporaton: Industry Peers, Similar BetsColgate Palmolive Co. vs Kimberly Clark Corporaton: Industry Peers; Which Stock Is A Better Bet?Colgate Palmolive Co. vs Johnson & Johnson: Industry Peers; Which Stock Is A Better Bet?Procter & Gamble vs Estee Lauder: Industry Peers; Which Stock Is A Better Bet?Procter & Gamble vs Nu Skin Enterprises: Industry Peers; Which Stock Is A Better Bet? Find all such comparisons on Colgate Palmolive Co. Peer Comparisons and Procter & Gamble Peer Comparisons

Colgate Palmolive Co. and Procter & Gamble Insights

Colgate Palmolive Co. investment ideasColgate Palmolive Co. counter-intuitive comparisonColgate Palmolive Co. peer comparisonComplete analyses on Colgate Palmolive Co. (CL) stockLatest analyses on all stocks

Procter & Gamble investment ideasProcter & Gamble counter-intuitive comparisonProcter & Gamble peer comparisonComplete analyses on Procter & Gamble (PG) stockLatest analyses on all stocks

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