• Wondering if Colgate-Palmolive at around US$90.13 is offering fair value today, or if the price is getting ahead of itself.
• The stock is up 16.0% year to date and 27.2% over 3 years, while the return over the last year is slightly down 0.6%, which can leave investors questioning whether the recent strength has fully run its course or is just pausing.
• Recent news coverage has focused on Colgate-Palmolive's position as a global consumer staples stock, with attention on how its brands and category exposure fit into long term portfolios. Commentators have also highlighted that defensive stocks can behave differently to the broader market during changing sentiment, which helps frame these mixed return figures.
• Colgate-Palmolive currently has a valuation score of 2 out of 6. Next you will see how different valuation approaches assess the stock today, and how a more holistic method at the end of the article can give you an even clearer view.

Colgate-Palmolive scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Colgate-Palmolive Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a stock could be worth by projecting future cash flows and discounting them back to today’s dollars. It focuses on the cash the company may generate for shareholders rather than just earnings multiples.

For Colgate-Palmolive, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $3.72b. Analyst inputs and subsequent extrapolations by Simply Wall St project free cash flow of $2.78b in 2026 and $3.97b in 2030, with additional estimates out to 2035, all in $.

Discounting these projected cash flows back to today gives an estimated intrinsic value of $120.06 per share. At a current share price of about $90.13, the model implies the stock trades at roughly a 24.9% discount, which suggests it screens as undervalued on this cash flow basis.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Colgate-Palmolive is undervalued by 24.9%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Approach 2: Colgate-Palmolive Price vs Earnings

For a profitable company like Colgate-Palmolive, the P/E ratio is a useful way to relate what you pay for each share to the earnings the business is currently generating. Investors generally accept that stronger earnings growth and lower perceived risk can support a higher P/E, while slower growth or higher risk usually point to a lower, more conservative range.

Colgate-Palmolive is trading on a P/E of 34.54x. That is higher than the Household Products industry average P/E of 16.86x and above the broader peer group average of 21.15x. To move beyond simple comparisons, Simply Wall St calculates a proprietary “Fair Ratio”, which is the P/E that might be expected given factors such as earnings growth, industry, profit margins, company size and risk profile. For Colgate-Palmolive, this Fair Ratio is 23.79x.

Because the Fair Ratio incorporates company specific fundamentals as well as its sector and market cap, it can be more informative than just lining the stock up against industry or peer averages. With the current P/E of 34.54x sitting above the Fair Ratio of 23.79x, this approach indicates the stock screens as overvalued on an earnings multiple basis.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Colgate-Palmolive Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Meet Narratives, which let you connect your view of Colgate-Palmolive’s story to a clear forecast for revenue, earnings and margins, then to a Fair Value that you can compare with today’s price on Simply Wall St’s Community page. There, investors around the world share viewpoints that can differ widely. For example, one Narrative leans toward the higher analyst fair value of about US$105.00 based on confidence in the 2030 plan and margin resilience. Another leans toward the lower US$85.00 view that focuses on cost pressures and competition. Each Narrative adjusts over time as new news, earnings and guidance are reflected in the numbers, helping you judge whether the stock looks closer to a buy, a hold or a sell for your own portfolio rules.

Do you think there's more to the story for Colgate-Palmolive? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.