Should You Pick CL Stock At $87?

Core Viewpoint - Colgate-Palmolive's Q4 results showed a revenue miss but earnings slightly exceeded expectations, leading to a stock price decline due to a disappointing 2025 outlook [1][6]. Financial Performance - Q4 revenue was reported at $4.94 billion, missing the consensus estimate of$4.99 billion, while adjusted earnings were $0.91 per share, slightly above the expected$0.89 [1]. - The company's revenue reflected a 0.1% decline on a reported basis but a 4.3% growth on an organic basis, with a 2.5% rise in volumes and 1.8% pricing gains, offset by 4.4% forex headwinds [3]. - Gross margin expanded by 70 basis points year-over-year to 60.3%, contributing to a 5% year-over-year growth in adjusted earnings [4]. Segment Performance - Revenue was derived from two segments: Oral, Personal, & Home Care (78% of total sales) and Hill's Pet Nutrition (22% of total sales) [3]. - Latin American sales were significantly impacted by currency fluctuations, with FX accounting for a -16.4% contribution, despite a 9.2% organic sales growth in the region [5]. Stock Performance - Colgate-Palmolive stock has returned 12% since the beginning of 2024, underperforming the S&P 500, which is up 27% [2]. - The stock has shown inconsistent performance over the past four years, with annual returns of 2% in 2021, -5% in 2022, 4% in 2023, and 17% in 2024 [6]. Future Outlook - The company expects organic sales growth between 3% and 5% and low to mid-single-digit growth in adjusted earnings for 2025 [4]. - At a current trading level of $87, the stock is valued at under 24 times trailing earnings of$3.60 per share, which is lower than its five-year average P/E ratio of 26 times, suggesting potential for growth despite ongoing foreign exchange pressures [8].