UBS has maintained its Buy rating and $93 price target for Colgate-Palmolive Company (NYSE:CL) in anticipation of the company's fourth-quarter earnings report, set to be released on January 30. This price target closely matches InvestingPro's Fair Value estimate, which suggests the stock is currently undervalued based on its recent price of $84.59.
Expectations for Colgate-Palmolive's fourth-quarter earnings per share stand at $0.91, aligning with the consensus estimates from both Visible Alpha and FactSet. Since its previous quarterly earnings announcement, Colgate-Palmolive has outperformed the Consumer Staples Select Sector SPDR Fund (XLP) by roughly 510 basis points. Year-to-date, the stock has delivered a total return of 7.88%, although the company has encountered a slight 0.04% decrease in revenue over the past twelve months.
UBS highlights several factors contributing to improved investor sentiment towards Colgate-Palmolive. These include an appealing risk-reward balance, expectations for accelerated organic growth without significant shifts in category demand, and stronger consumer purchase trends within the United States. The company's gross profit margin, notable at 60.15%, alongside a consistent dividend policy—having increased dividends for 36 consecutive years—supports this positive outlook.
The stock trades at approximately 22 times the next twelve months’ price-to-earnings ratio, representing a 22% premium over large-cap multinational peers, exceeding its five-year average premium of 11%. Data from InvestingPro indicates a current price-to-earnings ratio of 23.68 and a relatively elevated PEG ratio of 9.18, signaling that Colgate-Palmolive’s stock is priced at a premium relative to its growth forecasts.
Despite the pending earnings release, UBS does not anticipate any significant market-moving catalyst. The firm asserts that Colgate-Palmolive’s strong fundamental visibility justifies its premium valuation, particularly during a period where both top and bottom line visibility remain constrained for the broader consumer products sector. Supporting this view, InvestingPro assigns the company an overall financial health score of "GOOD" and an Altman Z-Score of 8.5, which indicates strong financial resilience.
In other recent developments, Colgate-Palmolive reported increases in net sales and earnings per share for the second quarter of 2025, navigating challenges such as raw material inflation and foreign currency impacts. The company reaffirmed guidance for low single-digit earnings per share growth for the full year.
From an analyst perspective, Piper Sandler upgraded the stock to Overweight, citing potential growth acceleration in 2026, especially in emerging markets. Conversely, Argus downgraded the stock from Buy to Hold, expressing concerns about margin pressures and limited growth prospects. Additionally, RBC Capital upgraded Colgate-Palmolive to Outperform and maintained a price target of $88, recognizing a favorable positioning despite recent global category growth issues.
Colgate-Palmolive also declared a quarterly cash dividend of $0.52 per share, payable on February 13, 2026, underscoring its longstanding commitment to shareholders with uninterrupted dividend payments since 1895.
These developments illustrate a complex landscape for investors, combining positive growth signals with margin and revenue challenges, alongside varying analyst opinions on the stock’s medium-term outlook and valuation.