Colgate Palmolive Equity Research Report – Part IV


In my previous posts, I covered business performance, product category and financial performance of Colgate Palmolive. (For previous part, click here, here and here)

In this part of equity research report, I am going to cover management quality and competition that Colgate Palmolive is facing.


Management Quality of Colgate Palmolive


How to judge whether the management of a company is good or bad?

Firstly, I would look at capital allocation skills. How do I decide whether the management has good capital allocation skills or not?

The number that will give you an answer to this question is Return on Equity. As we have seen in financial performance, Colgate Palmolive has earned ROE well above 40% for last 9 years and for last 4 years, it is 100%+. This shows the management is allocating capital very well where it can earn high return on equity. After all, management’s first function is—to maximize shareholder’s wealth.

Second point is whether there is any equity dilution in past 10 years?

Colgate Palmolive has not seen any equity dilution in past 10 years. However, the company split its share in 10 parts and made it Re.1 in 2008.

Third important point is remuneration or salary paid to the management.

In 2012, the company net profit was Rs.446.40 crores and the total remuneration paid to the Directors of the company stood at Rs. 15.44 Crores, which is 3% of net profit and not too high.

Fourth point is how the company is using its cash. For the last 10 years, company is consistently paying high dividend and its dividend payout ratio is well above 70%. Also, company is reinvesting cash into business with high return on equity. Also, the company is sitting on a lot of cash.

In addition to the points mentioned above other points like—steady sales growth, good profitability and cash flows, sharing profits with shareholders in the form of dividends and earning high return on capital—are positive.

In short, Colgate Palmolive has top quality management.




Colgate Palmolive Equity Research Report
Colgate Palmolive Equity Research Report


Colgate Palmolive faces stiff competition from players like Hindustan Unilever and Dabur in Oral Care segment. Due to aggressive marketing, the competition is getting tough. Colgate is market leader with approximately 55% market share in toothpaste category.

Management in the past has focused on profitability and market share both, which is good for company like Colgate Palmolive. Increasing operating margins and market leader position in oral care segment justify the same.


In the next post, I will cover valuation part of Colgate Palmolive.

Special Bonus on BIWS Programs from FinanceWalk
Here's an offer on Breaking Into Wall Street (BIWS) programs:

All FinanceWalk readers will get FREE $97 Bonus - FinanceWalk's Equity Research Program.

If you want to build a long-term career in Financial Modeling, Investment Banking, and Private Equity, I’m confident these are the only courses you’ll need. ( Because Brian (BIWS) has created world-class online financial modeling training programs that will be with you FOREVER).

If you purchase BIWS courses through FinanceWalk links, I’ll give you a FREE Bonus of FinanceWalk's online Equity Research Program ($97 Value).

I see FinanceWalk's Equity Research Program as a pretty perfect compliment to BIWS courses – BIWS helps you build financial modeling and investment banking skills and then I will help you build equity research and report writing skills.

To get the FREE $97 Bonus, please purchase from the following links.

Excel and Financial Modeling Fundamentals – Free $97 Bonus

Advanced Financial Modeling - Free $97 Bonus

Bank & Financial Institution Modeling – Free $97 Bonus

Oil & Gas Modeling – Free $97 Bonus

Real Estate & REIT Modeling – Free $97 Bonus

Investment Banking Networking Toolkit – Free $97 Bonus

Investment Banking Interview Guide – Free $97 Bonus

IB Networking Toolkit + IB Interview Guide $144 ( Save $50)

BIWS Platinum – Save $632 ( Save 35%) + Free $97 Bonus : The most comprehensive IB package on the market today. Includes the NEW and Improved BIWS Premium Financial Modeling Course (RRP: $497) PLUS access to the above 6 complementary courses designed to make you into an even more well-rounded IB Professional:

BIWS Premium – Excel & Modeling Fundamentals and Advanced Financial Modeling programs together – save $97 ( Save 20% ) + Free $97 Bonus

Industry Specific Course Bundle – get Bank Modeling + Oil and Gas Modeling + Real Estate Modeling for just $697 and save $344 + Free $97 Bonus

In order to get your FREE Bonus, you must:

  1. Purchase the course through FinanceWalk links.
  2. Send me an email along-with your full name and best email address to so I can send you the course login details.
Click Here to Check All BIWS Programs – Free $97 Bonus

Next Batch Starts on 8th September, 2015
Our Full Time Financial Modeling Investment Banking Course (6 Weeks) starts on 8th September, 2015 and 10 Day Weekend Workshop starts on 5th September, 2015 in New Delhi, India.

Only few seats remain. Interested candidates can contact me

Free Download: Financial Modeling Videos

Learn the best tools, get Discount Coupon Codes and Bonus to build a powerful career in finance.

Leave a Reply

Your email address will not be published. Required fields are marked *