Colgate-Palmolive Company (NYSE:CL) and Edgewell Personal Care Company (NYSE:EPC) are both Consumer Goods companies that recently hit new low. Naturally, this has created a bit of a stir amongst investors. We will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation to determine if one is a better choice than the other.
Colgate-Palmolive Company (NYSE:CL) operates in the Personal Products segment of the Consumer Goods sector. The company has grown sales at a -1.90% annual rate over the past five years, putting it in the low growth category. CL has a net profit margin of 15.50% and is more profitable than the average company in the Personal Products industry. In terms of efficiency, CL has an asset turnover ratio of 1.22. This figure represents the amount of revenue a company generates per dollar of assets. CL’s financial leverage ratio is 47.52, which indicates that the company’s asset base is primarily funded by debt.
Colgate-Palmolive Company (CL) pays out an annual dividend of 1.60 per share. At the current valuation, this equates to a dividend yield of 2.30%. The company has a payout ratio of 58.00%. CL’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0.22. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 30.55, and is less expensive than the average stock in the Personal Products industry. The average investment recommendation for CL, taken from a group of Wall Street Analysts, is 2.70, or a hold.
Over the past three months, Colgate-Palmolive Company insiders have been net buyers, dumping a net of -392,375 shares. This implies that insiders have been feeling relatively bearish about the outlook for CL. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. CL has a beta of 0.75 and therefore an below average level of market volatility.
Edgewell Personal Care Company (NYSE:EPC) operates in the Personal Products segment of the Consumer Goods sector. EPC has increased sales at a -12.80% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of -0.90% and is less profitable than the average Personal Products player. EPC’s asset turnover ratio is 0.5 and the company has financial leverage of 1.52. EPC’s return on equity of -1.20% is worse than the Personal Products industry average.
The average analyst recommendation for EPC is 2.80, or a hold.
Edgewell Personal Care Company insiders have bought a net of 11,419 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, EPC’s beta of 0.81 indicates that the stock has an below average level of market risk.
Colgate-Palmolive Company (NYSE:CL) scores higher than Edgewell Personal Care Company (NYSE:EPC) on 9 of the 13 measures compared between the two companies. CL has the better fundamentals, scoring higher on growth, profitability, efficiency and return metrics.