So Is Colgate Expensive?

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.