Colgate-Palmolive Stock Underperformed The S&P Despite Consistent Sales Growth- Here’s Why

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CL: Colgate Palmolive logo
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Colgate Palmolive

Colgate-Palmolive (NYSE: CL) stock price gained 32% from $60 at 2018 end to around $78 currently, primarily due to favorable changes in its revenues. During this period, the company witnessed a 14% increase in revenues, and a 3.3% drop in the outstanding share count further helped support revenue per share. Additionally, helped by a rise in the P/S multiple, the company’s stock price has risen 32%, but still underperformed the S&P 500, which returned a little over 50% over the same period.

In our interactive dashboard, Why Colgate-Palmolive Stock Moved: CL Stock Has Gained 32% Since 2018, we break down the factors behind this move.

(A) CL’s Total Revenue has grown 14% from $15.5 billion in FY 2018 to $17.7 billion on an LTM basis

  • CL’s total revenue rose steadily from $15.5 billion in FY ’18 to $17.4 billion in FY ’21, and as demand has remained strong since the pandemic, with sales rising to $17.7 billion currently.
  • Colgate-Palmolive is a leading manufacturer and distributor of household, health care, personal care, and veterinary products, operating in markets across the world.
  • As of FY ’21, Oral, Personal and Home Care sales make up the majority of CL’s total revenue, bringing in 81% of the company’s sales, with Pet Nutrition making up the remaining 19%.
  • For additional details about CL’s revenues and comparison to peers, see Colgate-Palmolive (CL) Revenue Comparison
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(B) Revenue per share (RPS) increased 18% from $18.00 in FY 2018 to $21.24 currently

  • Colgate-Palmolive revenue rose from $15.5 billion in FY ’18 to $17.7 billion currently, while the outstanding share count decreased from around 863.6 million in FY 2018 to 835.1 million currently.
  • Due to this, RPS has jumped from $18.00 in FY ’18 to $21.24 currently.

(C) Price-To-Sales (P/S) multiple for Colgate-Palmolive rose steadily from 3.3x in 2018 end to 4.4x by 2020 end but has since pulled back to 3.7x currently, still around 10% higher than what it was in late 2018

  • Colgate-Palmolive’s performance since 2018-end saw its P/S multiple rise from 3.3x in 2018 to 4.4x in 2020.
  • Despite CL’s consistent sales performance over the years, the P/S multiple has dropped to 3.7x currently due to increased uncertainty surrounding global economic conditions.
  • For additional details about the company’s historical returns and comparison to peers, see Colgate-Palmolive (CL) Stock Return.

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 Returns Dec 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 CL Return 1% -8% 20%
 S&P 500 Return -7% -20% 70%
 Trefis Multi-Strategy Portfolio -6% -22% 213%

[1] Month-to-date and year-to-date as of 12/30/2022
[2] Cumulative total returns since the end of 2016

 

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