QS Research · Michael Burry's Scion Capital analyst template · 2006
COLGATE PALMOLIVE CO (CL)
As of 2026-11-09 · 11/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case none · downside -14% · upside +11%
The market is not missing the Q3 2026 beat or the raised FY2026 guidance; at 21.9x TTM EV/EBITDA and 37.4x P/E, those are already in the price. My base keeps section 13's TTM to Sep 30, 2026 EBITDA of $3.80B and today's 21.9x: 21.9 x $3.80B = $83.22B EV; less $6.46B net debt = $76.76B equity, or $96.56 at 794.92M shares, so the base is 0%. Holding that multiple but flexing EBITDA, a $3.30B downside gives $82.79 (-14.3%) and a $4.20B upside gives $107.58 (+11.4%), neither enough for a long or short under the rule. This is a pass: the franchise is healthy and cash-generative, but the multiple already discounts mid-single-digit growth and the North America/input-cost risks keep the risk/reward balanced.
Key numbers
- Share price: $96.56
- Market cap: $76.76B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $21.29B
- EV / EBITDA (TTM): 21.9x
- P/E (TTM): 37.4x
- Price / book: 266.52x
The 15 boxes
- ✓ 1. Long-form business notes
Colgate sells toothpaste, soap, household cleaners and pet food in over 200 countries through two segments — Oral, Personal and Home Care (77% of FY2025 net sales) and Pet Nutrition (23%) — with Pet Nutrition the clear mix winner versus FY2020 (17%). Revenue rose every year from $16.47B in FY2020 to $20.38B in FY2025 and gross profit rose to $12.25B, but FY2025 operating income fell to $3.31B from $4.27B and net income to common to $2.13B from $2.89B. Cash generation held up (FY2025 operating cash flow $4.20B vs capex $564M) and is being returned via buybacks ($1.21B in FY2025), which cut diluted shares to 811.1M and total equity to $54.0M. The selling model has shifted toward omni-channel/eCommerce and AI-driven demand generation, with Walmart at ~11% of FY2025 net sales.
- ○ 2. Competitive advantage
The sources support a scaled branded consumer business: over the six fiscal years ended 2020-12-31 to 2025-12-31 gross margin stayed at 57.0%-60.8%, operating cash flow was positive every year and reached $4.20B in FY2025 on $564M capex. But they do not prove a durable moat: the 10-K filed 2026-02-23 describes vigorous worldwide competition from strong local and private-label rivals, some better-resourced companies, and new eCommerce/AI direct-to-consumer entrants. FY2025 operating income and net income to common fell, and the 10-K records a Q4 2025 $794 after-tax impairment on skin-health goodwill/intangibles, so the net figure is not a clean operating comparison.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) was a growth quarter: net sales $5,369M, +4.6% (volume +1.7%, pricing +2.0%, FX +1.0%), organic +3.6%, with GAAP gross margin 60.2% (+80 bps) and GAAP operating profit $1,088M (+3%) held back only slightly by $30M of Strategic Growth and Productivity Program charges; base business operating profit was $1,117M (+5%) at a 20.8% margin. GAAP diluted EPS rose to $0.94 from $0.91 and base business EPS to $0.97 (+7%), and nine-month operating cash flow was $2,913M. Growth was uneven by division: Latin America +12.5% and Hill's +5.6% offset a 1.7% North America decline with volume down 3.7%. Guidance was narrowed and partly raised (FY2026 net sales +4% to +5%, base business EPS +5% to +7%), and the 10-Q reports no material change in risk factors.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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