Best known for its iconic oral care products, Colgate-Palmolive (or simply Colgate) is a leading global consumer products company headquartered in Manhattan, New York, US. Colgate is focused on four core business categories: Oral Care, Personal Care, Home Care, and Pet Nutrition. The company sells its products in over 200 countries and territories around the world under popular brand names such as Colgate, Palmolive, Protex, Sorriso, Axion, Filorga, Hill’s Diets, Ajax, and Meridol. The company was founded in 1806 by William Colgate.
Colgate started out as a soap and candle manufacturing company, and it was not until 1873 that the company produced its first toothpaste that was sold in a jar. Before the turn of the 20th century, Colgate sold the first toothpaste in a tube, something that is now a standard today. In the early 1990s, Colgate had already started expanding internationally, and in 1928 it merged with Palmolive, then a company that was a leading soap manufacturer. In the following years, the new company focused on growth by acquisition, but it then shifted strategy in the 1960s to focus on an extensive new product development program. This led to the introduction of new home care products, such as detergents, which propelled the company to a $1 billion status by 1967.
The company diversified into more product categories and in the 21st century, it has maintained a focus on driving growth through effective brand building and efficient core innovation. This means Colgate has been relatively sleepy in the M&A market, with the most recent notable (but isolated) deal being the 2019 acquisition of Laboratoires Filorga for $1.7 billion.
Colgate-Palmolive Company is listed on the NYSE, trading under the ticker symbol CL. The company’s stock is categorised in the Consumer Defensive sector, under the Household & Personal Products industry.
Colgate describes itself as a caring, innovative company that has made people smile over the years. But has its stock done the same?
CL Stock History
Since 2000, Colgate has implemented one stock split: a 2-for-1 on May 16th, 2013. A quick glance at the CL stock chart shows that prices have always reflected the underlying business of Colgate – strong performance, stable growth, and consistent returns.
At the turn of the millennium, the CL stock traded around the $25-price handle. The stock then started drifting upwards slowly and managed to peak at around $40 by January 2008. The effects of the 2008 Great Recession then limited further gains, but the stock resumed its rally in mid-2009 and managed to print a peak at circa $75 by mid-2016. A period of consolidation then followed, but the stock remained resilient and rallied to its all-time high of above $86 in December 2020. CL stock has remained largely stagnant since then, but it continues to trade above $75 as of October 2021.
Due to its stable business, Colgate has been a consistent dividend payer. The company has paid out uninterrupted dividends since 1985, averaging a dividend yield of over 2% in recent years.
How to Trade CL Stock
Here are the factors to consider when trading CL stock:
- Legislative and Taxation Issues
As a multinational company serving over 200 countries, Colgate has diverse legislative challenges to deal with in different jurisdictions. These include intellectual rights, health and safety laws, supply chain contracts, as well as environmental concerns. The company also has to deal with different taxation regimes installed in different jurisdictions as well. Sudden changes in legislative and taxation policies can lead to pricing adjustments of Colgate’s products, which consequently can impact its revenue goals or projections.
The consumer goods space is fiercely competitive, with Colgate having to deal with equally capable giants such as Procter & Gamble, Johnson & Johnson, Unilever, and Clorox. The competition also comes from local and regional players in different markets. Some of the business aspects that competition is based on include product pricing, new product rollouts, promotional activities, brand strength, as well as entering new markets.
- Changing Consumer Preferences
As a consumer goods company, Colgate’s bottom line heavily depends on the constant demand for its products. Admittedly, Colgate products are incredibly successful in their various markets, and the company has long committed to continuous innovation. But consumer preferences are also very unpredictable and can change in an instant, especially as the modern consumer is very conscious and informed. This is however both an opportunity and a threat. If Colgate is quick to respond to changing consumer preferences, it will benefit immensely; but if it is slow, it can suffer greatly.
- Periodic Earnings Reports
As an FMCG (fast-moving consumer goods) company, Colgate’s earnings reports are very important to investors because they paint the picture of the company’s performance in the market. Colgate’s fiscal year runs from January to December, and the company releases its earnings reports quarterly. Some of the most important metrics for investors include gross revenues, net sales by geographical market, net sales by market maturity (developed and emerging), as well as declared dividends.
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