Argus: Colgate Shares Offer Investors Value

Colgate-Palmolive Company CL reported an earnings beat for the first time in four quarters in late April, and investors should consider buying the stock, according to Argus.

The Analyst

Argus' John Eade upgraded Colgate-Palmolive's stock from Hold to Buy with a new $72 price target.

The Thesis

Colgate's stock has fallen around 10 percent over the past three months and 16 percent over the past year, Eade said in the upgrade note. (See the analyst's track record here.)

The stock's underperformance versus the broader market — coupled with the first earnings beat in one year — implies that Colgate now offers "value" to investors near its 52-week low levels, the analyst said. The chart is showing a "bearish pattern of lower highs and lower lows" that dates back to the start of 2018, but should now move higher, he said. 

Colgate's strong focus on emerging markets and segments like mouthwash, toothpaste and toothbrushes should help the company grow its earnings and cash flow better than its peers, Eade said. The company also boasts an "exemplary record" of dividend growth, having raised its payout to investors for more than 50 years. Colgate is projected to lift its dividend payout from $1.63 per share to $1.71 per share in 2019.

Price Action

Colgate-Palmolive shares were trading higher by 1.87 percent at the time of publication Friday. 

Related Links:

Bernstein: Colgate's Got A Target On Its Back For Activist Investors

Morgan Stanley Shifts To Neutral On Colgate-Palmolive, Cites Emerging Markets Weakness