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How Do Analysts Rate Colgate-Palmolive and Peers?

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Analyst coverage

As of January 17, 2017, of the 20 analysts covering Colgate-Palmolive (CL), three analysts, or 15%, had rated the stock as a “buy.” The stock was rated “hold” by 85% of the analysts. Analysts set the stock’s 12-month price target at $72.20 per share, with an upside potential of 8%.

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Consensus “hold” rating

Colgate-Palmolive, which reported a fall in its adjusted EPS (earnings per share) for five consecutive quarters, recovered slightly with flat earnings in 2Q16 and a 1.4% growth in its adjusted EPS in 3Q16. As disclosed in the company’s 3Q16 quarterly report, the company held a 44% share of the global toothpaste market and a 33.2% share of the global manual toothbrush market on a year-to-date basis. Colgate-Palmolive constitutes 2.9% of the Vanguard Consumer Staples ETF (VDC).

Comparison with peers

Of the 21 analysts covering Procter & Gamble (PG), 11 analysts, or 52%, have rated the stock as a “buy.” The stock is rated “hold” by 38% and “sell” by 10.0% of the analysts. Analysts have set the stock’s 12-month price target at $89.59 per share, with an upside potential of 5%. The company’s fiscal 1Q17 sales remained unchanged on a year-over-year basis at $16.5 billion, as higher volumes offset the negative impact of foreign exchange fluctuations. Its adjusted EPS (earnings per share) rose 5.1% due to improved margins and a lower tax rate. In December 2016, SunTrust Robinson Humphrey and Stifel downgraded Procter & Gamble’s rating.

Of the 15 analysts covering The Clorox Company’s (CLX) stock, 13% rated the stock as “buy,” 74% rated it as “hold,” and 13% rated it as “sell.” The 12-month average stock price target for Clorox is $119.36 per share, reflecting an upside potential of -2%.

Clorox’s sales rose 4% to $1.4 billion in fiscal 1Q17 due to higher volumes and higher prices in its international business. Fiscal 1Q17 sales were negatively impacted by an unfavorable mix, higher trade spending, and currency fluctuations. Clorox’s fiscal 1Q17 adjusted EPS rose 3% due to higher sales and cost savings.

For Kimberly-Clark (KMB), 14% of 14 analysts rated the stock as “buy,” 72% rated it as “hold,” and 14% rated it as “sell.” Analysts have set the average 12-month stock price target at $121.75 per share, with an upside potential of 5%. Kimberly-Clark’s sales fell 2.6% in fiscal 3Q16 due to the negative impact of currency translation. The company’s adjusted EPS rose 0.66% to $1.52 in fiscal 3Q16. We’ll discuss Colgate-Palmolive’s valuation in the next part of this series.

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