By Rob Otman
Colgate-Palmolive (NYSE: CL) is a $65 billion company today. Investors that bought shares one year ago are sitting on a -0.07% total return. That’s below the S&P 500’s return of 16.74%.
Colgate-Palmolive stock is underperforming the market. It’s beaten down, but it reports earnings tomorrow. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Colgate-Palmolive reported a recent EPS growth rate of 6.67%. That’s below the household products industry average of 214.39%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the household products industry is 34.57. And Colgate-Palmolive’s ratio comes in at 25.34. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Colgate-Palmolive stock cannot be calculated over the trailing 12-month period. That’s not good.
✗ Free Cash Flow per Share Growth: Colgate-Palmolive’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Colgate-Palmolive comes in at 15.15% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Colgate-Palmolive’s profit margin is above the household products average of 7.74%. So that’s a positive indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Colgate-Palmolive is 0%, and that’s below its industry average ROE of 64.79%.
Colgate-Palmolive stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
If you’re interested in finding Strong Buy stocks yourself, check out Fundamental Analysis Pro. It’s a free five-part mini-course that will teach you how to grade stocks like a Wall Street veteran. Click here to learn more. …read more
Source:: Investment You
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