Bank of America/Merrill Lynch Upgrades Colgate-Palmolive to a ‘Buy’



Price movement

Colgate-Palmolive (CL) has a market cap of $66.8 billion. It rose 2.7% to close at $72.78 per share on September 12, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.8%, -2.8%, and 11.1%, respectively, on the same day.

CL is trading 2.0% below its 20-day moving average, 1.8% below its 50-day moving average, and 4.9% above its 200-day moving average.

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Related ETF and peers

The iShares Russell 1000 Growth ETF (IWF) invests 0.11% 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 4.8% on September 12.

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

  • Procter & Gamble (PG) — $239.8 billion
  • Clorox (CLX) — $16.6 billion
  • Church & Dwight (CHD) — $12.5 billion

Colgate-Palmolive’s rating

Bank of America/Merrill Lynch has upgraded Colgate-Palmolive’s (CL) rating to a “buy” from “neutral.”

On September 9, 2016, KeyBanc initiated its coverage of Colgate-Palmolive with a “sector weight” rating.

TheStreet Ratings rated the stock as a “hold” with a score of “C.”

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Performance of Colgate-Palmolive in 2Q16

Colgate-Palmolive (CL) reported 2Q16 net sales of $3.8 billion, a decline of 7.3% from net sales of $4.1 billion in 2Q15. Sales of its Oral, Personal, and Home Care (or OPHC) segment in Latin America, Asia-Pacific, and Africa and Eurasia fell 16.7%, 7.3%, and 5.9%, respectively.

Sales of CL’s OPHC segment in North America and Europe rose 1.7% and 0.66%, respectively, between 2Q15 and 2Q16. Sales of its Pet Nutrition segment rose 3.6% in 2Q16. The company’s gross profit margin and operating profit rose 3.4% and 1.3%, respectively.

CL’s net income and EPS (earnings per share) rose to $600 million and $0.67, respectively, in 2Q16, compared to $574 million and $0.63, respectively, in 2Q15. It reported non-GAAP[1. generally accepted accounting principles] EPS of $0.70 in 2Q15 and 2Q16.

Colgate-Palmolive’s cash and cash equivalents and inventories rose 11.9% and 4.4%, respectively, between 4Q15 and 2Q16.

Quarterly dividend

Colgate-Palmolive (CL) declared a quarterly cash dividend of $0.39 per share on its common stock. The dividend will be paid on November 15, 2016, to shareholders of record on October 24, 2016.

In the next part, let’s take a close look at Philip Morris International (PM).


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