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Sterne Agee Downgraded Colgate-Palmolive to ‘Neutral’

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Price movement of Colgate-Palmolive

Colgate-Palmolive (CL) has a market cap of $59.2 billion. CL fell by 1.7% to close at $66.28 per share on February 26, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is -1.8%, 3.1%, and 0.10%, respectively.

Currently, CL is trading 0.05% below its 20-day moving average, 1.4% above its 50-day moving average, and 1.5% above its 200-day moving average.

The iShares Russell 1000 Growth ETF (IWF) invests 0.49% of its holdings in Colgate-Palmolive. The ETF tracks an index of US large-cap and mid-cap stocks selected from the Russell 1000 Index with the highest growth characteristics based on Russell’s style methodology. The YTD price movement of IWF was -5.9% as of February 25, 2016.

The market caps of Colgate-Palmolive’s competitors are as follows:

  • Procter & Gamble (PG): $219.3 billion
  • Clorox (CLX): $16.6 billion
  • Church & Dwight (CHD): $11.9 billion
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Sterne Agee downgraded Colgate-Palmolive

Sterne Agee downgraded Colgate-Palmolive’s rating to “neutral” from “buy.”

Performance of Colgate-Palmolive in recent 4Q15 and 2015

Colgate-Palmolive reported fiscal 4Q15 net sales of $3,899.0 million, a fall of 7.6% compared to net sales of $4,221.0 million in fiscal 4Q14. Oral, personal, and home care sales in Latin America, Europe/South Pacific, Asia, and Africa/Eurasia fell by 11.9%, 14.3%, 4.8%, and 16.4%, respectively. Sales from North America rose by 1.2% in fiscal 4Q15 compared to fiscal 4Q14.

The company’s net income and EPS (earnings per share) fell to -$458.0 million and -$0.51, respectively, in fiscal 4Q15 compared to $628.0 million and $0.68, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, CL reported net sales of $16,034.0 million, a fall of 7.2% YoY (year-over-year). Its net income and EPS fell to $1,384.0 million and $1.52, respectively, in fiscal 2015 compared to $2,180.0 million and $2.36, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories fell by 10.9% and 14.6%, respectively, in fiscal 2015.

The price-to-earnings and price-to-sales ratios of Colgate-Palmolive are 43.9x and 3.7x, respectively, as of February 26, 2016.

From December 31, 2015, the company started accounting for Venezuelan operations using the cost method of accounting. Now its consolidated balance sheet does not include the assets and liabilities of Venezuelan operations. It has recorded an after-tax charge of $1,058 million in fiscal 4Q15.

In the next part, we’ll look at Campbell Soup.

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