Vladislav Shchukin
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Colgate-Palmolive.

   Colgate-Palmolive is another company that operates in industry personal product on consumer goods sector. Company specialize on two segment of personal product market: first is Oral, Personal and Home Сare, second is Pet Nutrition. Like most of companies in the sector Colgate-Palmolive (CL on NYSE) has several brands which in turn spread worldwide.

   Switching attention to the company performance we can mention that company sale and gross profit have negative trend this year (Figure 1).

   The reason is strong dollar, 80% of company’s revenue generated abroad (figure 2), company increase prices of its product.

   In addition, investors' expectations about the Fed raising rates could make the dollar even more. This will lead to a further decline in revenue. In the previous quarter, the company managed to cut costs, but this trend will not last forever. Thus, the profit will go down.

   For understand the current company market indicators value we can analyze them by comparison with similar for competitors.


   CL     P&G    Uniliver    Church & Dwight    Clorox
Price/Sales    3.58     2.76    2.25    3.23     2.76
Price/Book    230     3.34    7.58    5.33    131.8
P/E    24.37     28.36    24    27.99    24.73
EV/Revenue    3.93     3.03    2.47    3.46    3.09
EV/EBITDA    14.35    12.31    13.35    14.96    14.71

   However, extremely high value of P/B ratio indicates that company is overvalued. So, we expect fall in stock price. Moreover, focusing on some technical analysis tools, we can go to conclusion that company stocks are for short.In this way, according to the data Colgate Palmolive has value of P/B ratio that greatly exceeds value of this indicator for others. Company has relatively high value of Price/Sale ratio. On the hand, P&G and Church & Dwight are more expensive in terms of ratio P/E.

   That is clearly on the graph that upper bound of price band had beenpassed on the short interval, but then immediate roll back took place. Data on volume of trades shows that investors did not change expectations of company’s’ stocks. Based on values of oscillators we can identify a continuation of the negative trend. 

   Also we can see on the next short-term period figure stock price hasn’t broken the resistance level what in turn indicates that downward trend won’t disappear. Furthermore, it may create a triangle, what in turn means that price will decrease in the future.

   Our recommendation: SHORT