A Closer Look at Colgate-Palmolive Stock Ahead of Earnings

The stock could benefit from a shift in bearish sentiment

Jan 19, 2022 at 10:11 AM
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On Jan. 18, Colgate-Palmolive Company (NYSE: CL) announced that its senior leadership team will release its fourth-quarter earnings report before the open on Friday, Jan. 28. The earnings call will be hosted by CEO Noel Wallace, CFO Stan Sutula, and CIRO John Faucher. Wall Street analysts have the consumer brand’s earnings per share (EPS) coming in at $0.79 for the upcoming report.

Colgate-Palmolive stock just inched back over its year-over-year breakeven to sport a nearly 4% lead, and it looks ready to take back recent pressure at the 20-day moving average today. The stock looks to be on the rebound, thanks  to a bounce off the $82 region, which has served as a floor since mid-December. At last check, the stock was up  1.6% to trade at $84.42.

cl jan 19

A round of post-earnings bull notes could put even more wind at the stock's back. Especially considering that just two of the 11 analysts in coverage call CL a "strong buy," compared to eight "hold" ratings, and one "strong sell." What's more, the 12-month consensus price target of $86.40 is a slim 2.5% premium to  current levels. 

Short-term options players have been bearish too. The stock's Schaeffer's put/call volume ratio (SOIR) of 1.37 sits above 77% of all annual readings, implying these traders have rarely been more put-biased. 

From a fundamental point of view, Colgate-Palmolive stock doesn’t offer much in the way of growth opportunity. CL has only increased its revenues and net income 12% and 11%, respectively, since fiscal 2018. Colgate-Palmolive is also estimated to grow its earnings just 5.3% and revenues just 3.1% in 2022. This makes CL's valuation appear rich. Colgate-Palmolive stock currently trades at a price-earnings ratio of 25.31 and a price-sales ratio of 3.90.

However, CL also doesn’t experience high levels of volatility, making it a viable dividend opportunity. Colgate-Palmolive Company has a forward dividend of $1.80 with a dividend yield of 2.17%. CL has also paid uninterrupted dividends since 1895 and has increased payments every year for 59 consecutive years.


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