Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.6 |
| P/S | 7.9 |
| EV/EBITDA | 2.2 |
| Fwd P/E | 5.7 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 22.6x
- ▸PEG: 1.63
CL · Why this verdict
Why Colgate-Palmolive (CL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality consumer franchise with a perfect four-quarter earnings-beat streak and free cash flow that exceeds net income has run above its near-term price target, leaving a marginally unfavorable risk/reward with downside slightly exceeding residual upside; the investment case rests on the quality and consistency of the business, but the current price offers little entry cushion.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Four consecutive quarterly earnings beats with an average positive surprise of 3.0%, paired with free cash flow running at 1.59 times reported net income, demonstrates reliable execution and earnings quality that reduces the probability of a sharp downside surprise. Bull case | The beat streak extends to 6 consecutive quarters and free cash flow conversion remains above 100% of net income over the next 12 months. | →Stable |
| CounterA perfect beat streak can reflect conservative guidance rather than genuine underlying momentum; if macro headwinds compress volume in consumer staples, the cushion built by guided-down numbers narrows and the next miss becomes more impactful. | ||
The stock has moved above its near-term price target, leaving no upside buffer — downside modestly exceeds the residual room — so the risk/reward is unfavorable at this price, and the position relies entirely on an upward target revision to justify holding. Price targets | Analyst consensus price target is revised upward by more than 10%, restoring meaningful upside and a favorable risk/reward ratio. | →Stable |
| CounterA high-quality business trading modestly above a resistance-based target is not necessarily overvalued; a conservative target methodology combined with sustained earnings delivery could reprice the stock higher without any fundamental change in the investment thesis. | ||
Debt-to-equity of 16.4 represents a meaningful balance-sheet penalty that limits financial flexibility — in a scenario where earnings soften or rates stay elevated, high fixed debt obligations constrain the ability to invest, return cash, or weather a downturn. Bear case | This pillar is falsified if debt-to-equity falls below 10x over the next four quarters, demonstrating active deleveraging and restoring financial flexibility. | →Stable |
| CounterConsumer staples with stable, recurring cash flows can sustainably service high leverage; a mature brand portfolio with pricing power creates predictable debt-service capacity, and the company's superior cash conversion mitigates the headline ratio. | ||
Growth is characterized as soft across both revenue and earnings dimensions, which limits the multiple expansion the market will award; at a forward price-to-earnings of 22.4 times and a PEG of 1.62, there is little room for the valuation to expand further without an acceleration in underlying growth. Valuation breakdown | PEG ratio falls below 1.0, indicating earnings growth has accelerated enough to justify — or compress — the current valuation. | →Stable |
| CounterConsumer defensive businesses are purchased for stability, not growth; the valuation premium reflects low beta and earnings durability, making multiple compression less likely even if growth remains at a subdued pace. | ||
Four consecutive quarterly earnings beats with an average positive surprise of 3.0%, paired with free cash flow running at 1.59 times reported net income, demonstrates reliable execution and earnings quality that reduces the probability of a sharp downside surprise.
→StableBull case
- Expectation
- The beat streak extends to 6 consecutive quarters and free cash flow conversion remains above 100% of net income over the next 12 months.
CounterA perfect beat streak can reflect conservative guidance rather than genuine underlying momentum; if macro headwinds compress volume in consumer staples, the cushion built by guided-down numbers narrows and the next miss becomes more impactful.
The stock has moved above its near-term price target, leaving no upside buffer — downside modestly exceeds the residual room — so the risk/reward is unfavorable at this price, and the position relies entirely on an upward target revision to justify holding.
→StablePrice targets
- Expectation
- Analyst consensus price target is revised upward by more than 10%, restoring meaningful upside and a favorable risk/reward ratio.
CounterA high-quality business trading modestly above a resistance-based target is not necessarily overvalued; a conservative target methodology combined with sustained earnings delivery could reprice the stock higher without any fundamental change in the investment thesis.
Debt-to-equity of 16.4 represents a meaningful balance-sheet penalty that limits financial flexibility — in a scenario where earnings soften or rates stay elevated, high fixed debt obligations constrain the ability to invest, return cash, or weather a downturn.
→StableBear case
- Expectation
- This pillar is falsified if debt-to-equity falls below 10x over the next four quarters, demonstrating active deleveraging and restoring financial flexibility.
CounterConsumer staples with stable, recurring cash flows can sustainably service high leverage; a mature brand portfolio with pricing power creates predictable debt-service capacity, and the company's superior cash conversion mitigates the headline ratio.
Growth is characterized as soft across both revenue and earnings dimensions, which limits the multiple expansion the market will award; at a forward price-to-earnings of 22.4 times and a PEG of 1.62, there is little room for the valuation to expand further without an acceleration in underlying growth.
→StableValuation breakdown
- Expectation
- PEG ratio falls below 1.0, indicating earnings growth has accelerated enough to justify — or compress — the current valuation.
CounterConsumer defensive businesses are purchased for stability, not growth; the valuation premium reflects low beta and earnings durability, making multiple compression less likely even if growth remains at a subdued pace.
Per-dimension breakdown
Quality
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 8.0 |
| Op margin | 8.4 |
| Net margin | 5.0 |
| Current ratio | 4.1 |
| FCF quality | 10.0 |
| Moat | 6.9 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 364%
- ▸Excellent cash conversion: 159% FCF/NI
- ▸High-quality business
Growth
2.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 0.8 |
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 2.1 |
- ▸Overbought (RSI 70)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 5.6 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $955,045 (0.001% of mkt cap)
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 6.9 |
| growth rank | 8.3 |
- ▸Superior ROE vs peers
- ▸Industry growth leader
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.7 |
| support resistance | 1.4 |
| 52w position | 8.6 |
| gap | 5.0 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 6.7 |
| volatility | 6.1 |
| put call | 8.9 |
| implied vol | 3.8 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 0.0 |
- ▸Above max pain $65
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 3.5 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:37d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.7=NEGATIVE
- 8K_SERIOUS:2.05
Warning (1)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.74
Upside
-6.1%
Downside
8.2%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityCONSERVATIVE — Beta 0.32<0.8, Div 232.0%, Q=7.7
Investment implication
The F-path SELL output reflects an overall score of 3.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.7=NEGATIVE, 8K_SERIOUS:2.05) reinforce the read. Current asymmetry R:R is -0.74 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.7, Sentiment at 6.2, and Risk (lower is worse) at 5.9; the weakest are Growth at 2.7, Technical at 4.2, and Value at 4.7. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.74 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Four consecutive quarterly earnings beats with an average positive surprise of 3.0%, paired with free cash flow running at 1.59 times reported net income, demonstrates reliable execution and earnings quality that reduces the probability of a sharp downside surprise.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, ending the beat streak.
- P2The stock has moved above its near-term price target, leaving no upside buffer — downside modestly exceeds the residual room — so the risk/reward is unfavorable at this price, and the position relies entirely on an upward target revision to justify holding.
Trip ifAnalyst consensus price target is revised upward by more than 10%, restoring upside exceeding 10%.
- P3Debt-to-equity of 16.4 represents a meaningful balance-sheet penalty that limits financial flexibility — in a scenario where earnings soften or rates stay elevated, high fixed debt obligations constrain the ability to invest, return cash, or weather a downturn.
Trip ifDebt-to-equity falls below 10x for 2 consecutive quarters.
- P4Growth is characterized as soft across both revenue and earnings dimensions, which limits the multiple expansion the market will award; at a forward price-to-earnings of 22.4 times and a PEG of 1.62, there is little room for the valuation to expand further without an acceleration in underlying growth.
Trip ifPEG ratio falls below 1.0, signaling earnings growth has accelerated relative to the current valuation.