The Colgate-Palmolive company is a
reputable name in the household industry worldwide. The company is responsible
to produce such products that result oral health care, personal hygiene related
stuff, household products and also deal with pet nutrition. Most of the revenue
generated by company in the fiscal year of 2013 was through oral health care.
Many major brands in the industry are functioning under Colgate-Palmolive.
Colgate-Palmolive generates a great
chunk of their income from areas where the growth rate is very high such as
Africa, Asia, Latin America. Asia is known to have the highest growth rate when
it comes to organic products. Many analysts who keep a close watch
on the company know that the brand itself is very expensive. In the start of
fiscal year 2014, it was said that they were trading at 64 dollars. People who
kept a track of the prices which will decline concluded after waiting for good
three to four months that nothing of this sort really happened. Many people are
still confused about the high cost and thus want to know the reason behind the
skyrocketing prices.
The price to earnings ratio of Colgate stock is 29.7 which is higher than the industry’s
average which is about 22.5. Moreover
the company has never in its history traded below the S&P 500 as well as
TTM when considering their 10 year portfolio. This clearly indicates the level
of consistency this brand has to offer. When it comes to margin
Colgate-Palmolive seeks to offer the best margin possible in comparison to the
entire household industry. They themselves are well aware of their popularity
in the market and thus know that they are the best in the market.
It needs to be mentioned here that the
margins are extraordinary and they would only grow better with time. The growth
however this quarter slacked where the company expected the growth to increase.
The company is known for the best
returns in this industry as well. The company has the best return on assets and
highest in this industry. The largest contributor to this would be its profit
margin. However, it is believed that the company is not using the assets
efficiently as the turnover for assets lies in the 67th percentile. Another
notable thing about the company is the intangible assets of the company along
with the goodwill cover 27% of the total assets.
Hence in a nutshell, nobody can deny
the popularity of Colgate-Palmolive in the
market and that easily concludes the reason why it has been able to
remain expensive.
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