December 30, 2018

NYSE: CL

COLGATE-PALMOLIVE CO
BUY HOLD SELL

HOLD
RATING SINCE 11/02/2015
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 12/27/2018
$1.68 2.81% 0.77 $51.8 Billion $57.41-$77.91 $59.69

Sector: Consumer Non-Discretionary Sub-Industry: Household Products Source: S&P

Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
CL BUSINESS DESCRIPTION
Colgate-Palmolive Company, together with its 78
subsidiaries, manufactures and sells consumer 76
products worldwide. It operates through two 74
segments, Oral, Personal and Home Care; and Pet
72
Nutrition.
70
STOCK PERFORMANCE (%) 68
3 Mo. 1 Yr. 3 Yr (Ann) 66
Price Change -10.55 -20.81 -3.77
64
GROWTH (%) 62
Last Qtr 12 Mo. 3 Yr CAGR 60
Revenues -3.25 2.23 -1.51 58
Net Income -13.84 -8.24 -5.01 Rating History
EPS -11.77 -6.57 -3.59 HOLD

RETURN ON EQUITY (%) Volume in Millions

40
CL Ind Avg S&P 500
Q3 2018 NA 26.56 14.82 20
Q3 2017 NA 137.61 13.41
0
Q3 2016 NA 126.68 11.79 2017 2018
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate COLGATE-PALMOLIVE CO (CL) a HOLD. The primary factors that have impacted our rating are mixed -
some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a
positive or negative performance for this stock relative to most other stocks. Among the primary strengths of
the company is its expanding profit margins over time. At the same time, however, we also find weaknesses
including a generally disappointing performance in the stock itself, deteriorating net income and weak
operating cash flow.

24.67 23.95 20.32 HIGHLIGHTS

Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%.
CL Ind Avg S&P 500
Since the same quarter one year prior, revenues slightly dropped by 3.2%. The declining revenue appears to
have seeped down to the company's bottom line, decreasing earnings per share.
EPS ANALYSIS¹ ($)
The gross profit margin for COLGATE-PALMOLIVE CO is rather high; currently it is at 62.52%. Regardless of
CL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results
of the gross profit margin, the net profit margin of 13.60% trails the industry average.

COLGATE-PALMOLIVE CO's earnings per share declined by 11.8% in the most recent quarter compared to the
same quarter a year ago. The company has reported a trend of declining earnings per share over the past
year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the
Q1 0.59
Q2 0.67
Q3 0.78
Q4 0.68

Q1 0.64
Q2 0.59
Q3 0.68
Q4 0.37

Q1 0.72
Q2 0.73
Q3 0.60

past fiscal year, COLGATE-PALMOLIVE CO reported lower earnings of $2.28 versus $2.72 in the prior year. This
year, the market expects an improvement in earnings ($2.96 versus $2.28).
2016 2017 2018
NA = not available NM = not meaningful
Net operating cash flow has declined marginally to $897.00 million or 9.39% when compared to the same
quarter last year. In conjunction, when comparing current results to the industry average,
1 Compustat fiscal year convention is used for all fundamental
data items. COLGATE-PALMOLIVE CO has marginally lower results.

Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CL has
underperformed the S&P 500 Index, declining 20.81% from its price level of one year ago. Looking ahead, we
do not see anything in this company's numbers that would change the one-year trend. It was down over the
last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway
the movement of this stock.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: December 30, 2018 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2018. All rights reserved.
 December 30, 2018
NYSE: CL

COLGATE-PALMOLIVE CO
Sector: Consumer Non-Discretionary Household Products Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 12/27/2018
$1.68 2.81% 0.77 $51.8 Billion $57.41-$77.91 $59.69

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
The household products industry is comprised of companies engaged in the manufacturing of non-durable
consumer goods such as cleaning products, detergents, disinfectants, brooms, mops, towels, rags,
14%

CHD disposable plates, and cutlery. The industry is mature, slow-growing, and price competitive. Major players
FA

are Procter & Gamble (PG), Colgate-Palmolive (CL), Kimberly-Clark (KMB), Clorox (CLX), and Energizer (ENR).
VO
RA
BL

The industry is concentrated and capital intensive. Demand is driven by population growth and consumer
E

preferences. Individual company profit depends on product innovation, effective sales and marketing, and
efficient operations. Large companies have scale advantages in purchasing, manufacturing, distribution, and
CENT
CENTA marketing, and smaller companies compete using specialization and niche product offerings.
WDFC
Revenue Growth (TTM)

The industry has experienced slow growth and intense competition over the years in established markets
SPB such as the United States, Europe, and Australia. There is increasing retail consolidation in developed
markets, which puts price pressure on various manufacturers.
UN
FA
VO

ENR CLX PGCL

US companies face issues related to patent and trademark protection, government approval, registration of
RA
B
0%

ODC products, compliance, and approval from the Food and Drug Administration (FDA), the Consumer Product
LE

KMB
5%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $136.9 Million and $229.3
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
REVENUE GROWTH AND EARNINGS YIELD
14%
27.5% Safety Commission, the Environmental Protection Agency, and Federal Trade Commission. Price competition,
promotional activities and product introductions are critical factors influencing the industry. Quality, value,
packaging, and changes in policies related to retail customers, also impact company performance.
The global household products industry generates revenue in excess of $72 billion per year, of which
approximately 30% is from the US. Within the industry, textile washing product sales remain among the most
lucrative market segment. Product innovations and demographic gains are expected to result in incremental
profit growth.
Looking forward, the industry faces intense price and sales competition. For companies to achieve earnings
growth, they will need to reduce operational costs, achieve optimal utilization of production capacity, and
efficiently align sales operations to their sales networks. Increasing research and development activities can
help companies introduce new products and obtain patents. The US market for household cleaning products
is anticipated to grow at a compound annual growth rate of 2%.

CHD
FA

PEER GROUP: Household Products

VO
RA

Recent Market Price/ Net Sales Net Income

BL

Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
E

CL COLGATE-PALMOLIVE CO 59.69 51,770 24.67 15,625.00 2,117.00

CENT
CENTA KMB KIMBERLY-CLARK CORP 112.87 39,087 24.54 18,499.00 1,616.00
WDFC
ENR ENERGIZER HOLDINGS INC 45.12 2,702 29.68 1,797.70 93.50
Revenue Growth (TTM)

WDFC WD-40 CO 182.62 2,528 39.36 408.52 65.22

SPB PG PROCTER & GAMBLE CO 92.02 229,259 24.09 66,869.00 10,096.00
UN

SPB SPECTRUM BRND HLDG INC 42.63 2,278 4.92 3,145.90 768.30
FA
VO

CLX
PG
ENR
CL CLX CLOROX CO/DE 153.18 19,554 23.86 6,187.00 841.00
RA
B

CENTA CENTRAL GARDEN & PET CO 29.62 1,697 12.66 2,215.36 123.59
0%

ODC
LE

KMB
2% 22% CENT CENTRAL GARDEN & PET CO 32.39 1,697 13.84 2,215.36 123.59
Earnings Yield (TTM) CHD CHURCH & DWIGHT INC 65.71 16,180 19.91 4,104.60 831.40
Companies that exhibit both a high earnings yield ODC OIL DRI CORP AMERICA 26.25 137 32.41 265.50 6.10
and high revenue growth are generally more The peer group comparison is based on Major Household Products companies of comparable size.
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between 1.1% and
12.8%. Companies with NA or NM values do not
appear.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: December 30, 2018 PAGE 2
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2018. All rights reserved.
 December 30, 2018
NYSE: CL

COLGATE-PALMOLIVE CO
Sector: Consumer Non-Discretionary Household Products Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 12/27/2018
$1.68 2.81% 0.77 $51.8 Billion $57.41-$77.91 $59.69

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Colgate-Palmolive Company, together with its Below is a summary of the major fundamental and technical factors we consider when determining our
subsidiaries, manufactures and sells consumer products overall recommendation of CL shares. It is provided in order to give you a deeper understanding of our rating
worldwide. It operates through two segments, Oral, methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
Personal and Home Care; and Pet Nutrition. The company important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
offers oral care products, including toothpastes, understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
toothbrushes, and mouthwashes, as well as valuation. Please refer to our Valuation section on page 5 for further information.
pharmaceutical products for dentists and other oral
health professionals; personal care products comprising FACTOR SCORE
bar and liquid hand soaps, shower gels, shampoos,
conditioners, and deodorants and antiperspirants; and Growth out of 5 stars 2.0
home care products, such as laundry and dishwashing Measures the growth of both the company's income statement and weak strong
detergents, fabric conditioners, household cleaners, and cash flow. On this factor, CL has a growth score better than 30% of the
other related products. It also provides pet nutrition stocks we rate.
products for everyday nutritional needs; a range of
therapeutic products to manage disease conditions; and
various products with natural ingredients. The company's
Total Return out of 5 stars 2.0
principal global and regional trademarks include Colgate, Measures the historical price movement of the stock. The stock weak strong
Palmolive, Speed Stick, Lady Speed Stick, Softsoap, Irish performance of this company has beaten 30% of the companies we
Spring, Protex, Sorriso, Kolynos, elmex, Tom's of Maine, cover.
Sanex, Ajax, Axion, Fabuloso, Soupline, and Suavitel, as
well as Hill's Science Diet, Hill's Prescription Diet, and Efficiency out of 5 stars 5.0
Hill's Ideal Balance. It markets and sells its oral, personal Measures the strength and historic growth of a company's return on weak strong
and home care products to various retail and wholesale invested capital. The company has generated more income per dollar of
customers, and distributors; and pet nutrition products capital than 90% of the companies we review.
for dogs and cats through pet supply retailers and
veterinarians. Colgate-Palmolive Company was founded
in 1806 and is headquartered in New York, New York.
Price volatility out of 5 stars 2.5
Measures the volatility of the company's stock price historically. The weak strong
COLGATE-PALMOLIVE CO stock is less volatile than 40% of the stocks we monitor.
300 Park Avenue
New York, NY 10022 Solvency out of 5 stars 1.0
USA Measures the solvency of the company based on several ratios. The weak strong
Phone: 212-310-2000 company is more solvent than 10% of the companies we analyze.
http://www.colgate.com/en/us/oc/
Employees: 36000 Income out of 5 stars 4.0
Measures dividend yield and payouts to shareholders. The company's weak strong
dividend is higher than 70% of the companies we track.

THESTREET RATINGS RESEARCH METHODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: December 30, 2018 PAGE 3
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2018. All rights reserved.
 December 30, 2018
NYSE: CL

COLGATE-PALMOLIVE CO
Sector: Consumer Non-Discretionary Household Products Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 12/27/2018
$1.68 2.81% 0.77 $51.8 Billion $57.41-$77.91 $59.69

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial
COLGATE-PALMOLIVE CO's gross profit margin for the third quarter of its fiscal year 2018 is essentially
unchanged when compared to the same period a year ago. Sales and net income have dropped, although the
growth in net income underperformed the average competitor within the industry, the revenue growth did not.
COLGATE-PALMOLIVE CO has weak liquidity. Currently, the Quick Ratio is 0.67 which shows a lack of ability
to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already
having weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 298.14% from the same
0.73 2.96 E 3.03 E quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which
Q4 FY18 2018(E) 2019(E) financial difficulties could develop in the future.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
INCOME STATEMENT next 12-months. To learn more visit www.TheStreetRatings.com.
Q3 FY18 Q3 FY17
Net Sales ($mil) 3,845.00 3,974.00
EBITDA ($mil) 1,044.00 1,139.00
EBIT ($mil) 917.00 1,011.00
Net Income ($mil) 523.00 607.00

BALANCE SHEET
Q3 FY18 Q3 FY17
Cash & Equiv. ($mil) 961.00 1,602.00
Total Assets ($mil) 12,571.00 12,775.00
Total Debt ($mil) 6,604.00 6,527.00
Equity ($mil) -430.00 -108.00

PROFITABILITY
Q3 FY18 Q3 FY17
Gross Profit Margin 62.52% 63.59%
EBITDA Margin 27.15% 28.66%
Operating Margin 23.85% 25.44%
Sales Turnover 1.24 1.20
Return on Assets 16.84% 18.05%
Return on Equity NA NA

DEBT
Q3 FY18 Q3 FY17
Current Ratio 1.11 1.23
Debt/Capital 1.07 1.02
Interest Expense 36.00 28.00
Interest Coverage 25.47 36.11

SHARE DATA
Q3 FY18 Q3 FY17
Shares outstanding (mil) 867 878
Div / share 0.42 0.40
EPS 0.60 0.68
Book value / share -0.50 -0.12
Institutional Own % NA NA
Avg Daily Volume 5,044,352 3,171,371
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: December 30, 2018 PAGE 4
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2018. All rights reserved.
 December 30, 2018
NYSE: CL

COLGATE-PALMOLIVE CO
Sector: Consumer Non-Discretionary Household Products Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 12/27/2018
$1.68 2.81% 0.77 $51.8 Billion $57.41-$77.91 $59.69

RATINGS HISTORY VALUATION

Our rating for COLGATE-PALMOLIVE CO has not HOLD. COLGATE-PALMOLIVE CO's P/E ratio indicates a premium compared to an average of 23.95 for the
changed since 11/2/2015. As of 12/27/2018, the Household Products industry and a premium compared to the S&P 500 average of 20.32. Normally, for
stock was trading at a price of $59.69 which is additional comaprison, we would look at the price-to-book ratio; however, this company's price-to-book ratio
23.4% below its 52-week high of $77.91 and 4.0% is negative making the value useless for comparisons. The current price-to-sales ratio is well above the S&P
above its 52-week low of $57.41. 500 average and above the industry average, indicating a premium. Upon assessment of these and other key
valuation criteria, COLGATE-PALMOLIVE CO seems to be trading at a premium to investment alternatives
2 Year Chart within the industry.
$80
HOLD: $66.01

Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
$70 premium discount premium discount
CL 24.67 Peers 23.95 CL 17.52 Peers 16.07
$60 • Average. An average P/E ratio can signify an • Average. The P/CF ratio, a stock’s price divided by
industry neutral price for a stock and an average the company's cash flow from operations, is useful
growth expectation. for comparing companies with different capital
2017 • CL is trading at a valuation on par with its peers. requirements or financing structures.
• CL is trading at a valuation on par to its peers.

MOST RECENT RATINGS CHANGES

Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5
premium discount premium discount
Date Price Action From To CL 19.70 Peers 20.82 CL 0.83 Peers 4.09
12/27/16 $66.01 No Change Hold Hold • Average. An average price-to-projected earnings • Discount. The PEG ratio is the stock’s P/E divided
Price reflects the closing price as of the date listed, if available ratio can signify an industry neutral stock price and by the consensus estimate of long-term earnings
average future growth expectations. growth. Faster growth can justify higher price
• CL is trading at a valuation on par with its peers. multiples.
RATINGS DEFINITIONS &
• CL trades at a significant discount to its peers.
DISTRIBUTION OF THESTREET RATINGS
(as of 12/27/2018) Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
premium discount lower higher
38.51% Buy - We believe that this stock has the CL NM Peers 7.35 CL -6.57 Peers 4.98
opportunity to appreciate and produce a total return of • Neutral. A lower price-to-book ratio makes a stock • Lower. Elevated earnings growth rates can lead to
more than 10% over the next 12 months. more attractive to investors seeking stocks with capital appreciation and justify higher
lower market values per dollar of equity on the price-to-earnings ratios.
34.84% Hold - We do not believe this stock offers balance sheet. • However, CL is expected to significantly trail its
conclusive evidence to warrant the purchase or sale of • CL's P/B is negative making this valuation measure peers on the basis of its earnings growth rate.
shares at this time and that its likelihood of positive total meaningless.
return is roughly in balance with the risk of loss.
Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
26.65% Sell - We believe that this stock is likely to premium discount lower higher
decline by more than 10% over the next 12 months, with CL 3.31 Peers 3.24 CL 2.23 Peers 2.91
the risk involved too great to compensate for any • Average. In the absence of P/E and P/B multiples, • Lower. A sales growth rate that trails the industry
possible returns. the price-to-sales ratio can display the value implies that a company is losing market share.
investors are placing on each dollar of sales. • CL trails its peers on the basis of sales growth
• CL is trading at a valuation on par with its industry
TheStreet Ratings on this measurement.
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This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: December 30, 2018 PAGE 5
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2018. All rights reserved.