The stock price of Colgate-Palmolive (NYSE:CL) reached its 52-week high of $86 in December 2020 before the recent sell-off, leading to a 5% drop in CL stock within a week, to levels of around $79 currently. Colgate reported Q2 2021 earnings last week, with revenue coming in at $4.26 billion, up from $3.9 billion for the same period last year. However, rising COGS and operating expenses saw a marginal rise in operating income of only $50 million, to $1 billion. The company attributed this to significant raw material and logistics cost headwinds, and expects the difficult cost environment to continue in the later half of the year, leading to a drop in investor expectations.
Now, after a 5% fall in a week, will CL stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for CL stock average 3.2% in the next one-month (twenty-one trading days) period after experiencing a 5.4% drop over the previous week (five trading days).
But how would these numbers change if you are interested in holding CL stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Colgate-Palmolive stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
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MACHINE LEARNING ENGINE – try it yourself:
IF CL stock moved by -5% over five trading days, THEN over the next twenty-one trading days CL stock moves an average of 3.2%, with a strong 70.6% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of Colgate-Palmolive Stock Movements:
Question 1: Is the average return for Colgate-Palmolive stock higher after a drop?
Answer: Consider two situations,
Case 1: CL stock drops by 5% or more in a week
Case 2: CL stock rises by 5% or more in a week
Is the average return for CL stock higher over the subsequent month after Case 1 or Case 2?
CL stock fares better after Case 1, with an average return of 3.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of just 0.1% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Colgate-Palmolive stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Colgate-Palmolive stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For CL stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Colgate-Palmolive after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
It’s pretty powerful to test the trend for yourself for Colgate-Palmolive stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.