Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Colgate-Palmolive Co., current price multiples
| Colgate-Palmolive Co. | Procter & Gamble Co. | Consumer Staples | |||
|---|---|---|---|---|---|
| Selected Financial Data | |||||
| Current share price (P) | $75.62 | ||||
| No. shares of common stock outstanding | 826,691,529 | ||||
| Growth rate (g) | 275.29% | ||||
| Earnings per share (EPS) | $2.16 | ||||
| Next year expected EPS | $8.10 | ||||
| Operating profit per share | $3.50 | ||||
| Sales per share | $21.73 | ||||
| Book value per share (BVPS) | $0.49 | ||||
| Valuation Ratios (Price Multiples) | |||||
| Price to earnings (P/E) | 35.02 | 24.33 | 40.96 | ||
| Price to next year expected earnings | 9.33 | 21.73 | 36.53 | ||
| Price-earnings-growth (PEG) | 0.13 | 2.03 | 3.38 | ||
| Price to operating profit (P/OP) | 21.61 | 19.41 | 29.53 | ||
| Price to sales (P/S) | 3.48 | 4.40 | 2.49 | ||
| Price to book value (P/BV) | 155.90 | 7.09 | 13.10 | ||
Based on: 10-K (reporting date: 2022-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Colgate-Palmolive Co., historical price multiples
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The valuation multiples for the period between 2018 and 2022 exhibit a divergence between profitability-based metrics and revenue-based metrics, characterized by expanding earnings multiples and a contracting sales multiple.
- Earnings and Operating Profit Multiples
- A consistent upward trajectory is observed in both the Price to Earnings (P/E) and Price to Operating Profit (P/OP) ratios. The P/E ratio increased from 23.95 in 2018 to 33.85 in 2022, while the P/OP ratio rose from 15.56 to 20.89 over the same duration. This trend indicates an expansion in the valuation premium attributed to the company's profitability and operating efficiency.
- Revenue Multiple
- Contrary to the profitability metrics, the Price to Sales (P/S) ratio demonstrates a general decline following a peak of 4.16 in 2019. By December 31, 2022, the ratio decreased to 3.36, suggesting that the market valuation relative to top-line revenue has contracted over the latter half of the observed period.
- Book Value Multiple
- The Price to Book Value (P/BV) ratio is characterized by extreme volatility and exceptionally high values. After a peak of 557.38 in 2019, the ratio declined sharply to 89.90 in 2020, before recovering to 150.69 by 2022. These elevated levels suggest a significant disparity between the market capitalization and the accounting book value of the equity.
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Price to Earnings (P/E)
Colgate-Palmolive Co., historical P/E calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 830,378,790 | 840,487,222 | 848,562,678 | 855,029,777 | 861,676,494 | |
| Selected Financial Data (US$) | ||||||
| Net income attributable to Colgate-Palmolive Company (in millions) | 1,785) | 2,166) | 2,695) | 2,367) | 2,400) | |
| Earnings per share (EPS)2 | 2.15 | 2.58 | 3.18 | 2.77 | 2.79 | |
| Share price1, 3 | 72.77 | 79.15 | 78.72 | 76.27 | 66.70 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 33.85 | 30.71 | 24.79 | 27.55 | 23.95 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Procter & Gamble Co. | 23.91 | 24.46 | — | — | — | |
| P/E Ratio, Industry | ||||||
| Consumer Staples | 25.35 | 26.07 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
2 2022 Calculation
EPS = Net income attributable to Colgate-Palmolive Company ÷ No. shares of common stock outstanding
= 1,785,000,000 ÷ 830,378,790 = 2.15
3 Closing price as at the filing date of Colgate-Palmolive Co. Annual Report.
4 2022 Calculation
P/E ratio = Share price ÷ EPS
= 72.77 ÷ 2.15 = 33.85
5 Click competitor name to see calculations.
An analysis of the valuation metrics from 2018 to 2022 indicates a general expansion of the price-to-earnings multiple despite fluctuating earnings per share. The relationship between share price and earnings suggests a shift in market valuation perceptions over the five-year period.
- Share Price Movement
- The share price exhibited a steady increase from 66.70 in 2018 to a peak of 79.15 in 2021, followed by a decline to 72.77 by the end of 2022.
- Earnings per Share (EPS) Trends
- Earnings performance reached a peak in 2020 at 3.18 per share. Subsequently, a downward trend occurred, with EPS falling to 2.58 in 2021 and further decreasing to 2.15 in 2022.
- Price-to-Earnings (P/E) Ratio Analysis
- The P/E ratio demonstrated an overall upward trajectory, rising from 23.95 in 2018 to 33.85 in 2022. This increase is most pronounced in the final two years of the period, where the ratio rose from 24.79 in 2020 to 33.85 in 2022, coinciding with a period of declining earnings.
The divergence between decreasing earnings per share and an increasing P/E ratio indicates that the market attributed a higher premium to the stock in 2022 than in previous years, despite lower profitability. This suggests that the valuation became more aggressive relative to actual earnings performance toward the end of the observed period.
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Price to Operating Profit (P/OP)
Colgate-Palmolive Co., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 830,378,790 | 840,487,222 | 848,562,678 | 855,029,777 | 861,676,494 | |
| Selected Financial Data (US$) | ||||||
| Operating profit (in millions) | 2,893) | 3,332) | 3,885) | 3,554) | 3,694) | |
| Operating profit per share2 | 3.48 | 3.96 | 4.58 | 4.16 | 4.29 | |
| Share price1, 3 | 72.77 | 79.15 | 78.72 | 76.27 | 66.70 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 20.89 | 19.97 | 17.19 | 18.35 | 15.56 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Procter & Gamble Co. | 19.41 | 19.08 | — | — | — | |
| P/OP Ratio, Industry | ||||||
| Consumer Staples | 18.28 | 19.01 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
2 2022 Calculation
Operating profit per share = Operating profit ÷ No. shares of common stock outstanding
= 2,893,000,000 ÷ 830,378,790 = 3.48
3 Closing price as at the filing date of Colgate-Palmolive Co. Annual Report.
4 2022 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 72.77 ÷ 3.48 = 20.89
5 Click competitor name to see calculations.
Between 2018 and 2022, a consistent expansion in the Price to Operating Profit (P/OP) ratio is observed, with the multiple increasing from 15.56 to 20.89. This trend indicates that the market valuation of the equity has grown at a faster pace than the underlying operating profitability per share over the five-year period.
- Share Price Trajectory
- The share price experienced a steady upward trend from 2018 to 2021, rising from 66.70 US$ to a peak of 79.15 US$. A moderate decline followed in 2022, with the price closing at 72.77 US$.
- Operating Profit per Share Dynamics
- Operating profit per share exhibited volatility, reaching a peak of 4.58 US$ in 2020. Subsequently, a downward trend emerged, with values falling to 3.96 US$ in 2021 and further declining to 3.48 US$ by the end of 2022, marking the lowest operational profit level within the observed timeframe.
- Valuation Multiple Interpretation
- The P/OP ratio rose significantly during the final two years of the period, coinciding with the decline in operating profit per share. The increase to 20.89 in 2022, despite falling operational earnings, suggests an expansion in the valuation multiple. This divergence indicates that the market maintained a relatively high price for the stock despite weakening operating efficiency per share, resulting in a more expensive valuation relative to current operating profits.
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Price to Sales (P/S)
Colgate-Palmolive Co., historical P/S calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 830,378,790 | 840,487,222 | 848,562,678 | 855,029,777 | 861,676,494 | |
| Selected Financial Data (US$) | ||||||
| Net sales (in millions) | 17,967) | 17,421) | 16,471) | 15,693) | 15,544) | |
| Sales per share2 | 21.64 | 20.73 | 19.41 | 18.35 | 18.04 | |
| Share price1, 3 | 72.77 | 79.15 | 78.72 | 76.27 | 66.70 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 3.36 | 3.82 | 4.06 | 4.16 | 3.70 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Procter & Gamble Co. | 4.31 | 4.51 | — | — | — | |
| P/S Ratio, Industry | ||||||
| Consumer Staples | 1.54 | 1.61 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
2 2022 Calculation
Sales per share = Net sales ÷ No. shares of common stock outstanding
= 17,967,000,000 ÷ 830,378,790 = 21.64
3 Closing price as at the filing date of Colgate-Palmolive Co. Annual Report.
4 2022 Calculation
P/S ratio = Share price ÷ Sales per share
= 72.77 ÷ 21.64 = 3.36
5 Click competitor name to see calculations.
An analysis of the valuation metrics between 2018 and 2022 reveals a divergence between consistent revenue growth and the market's valuation multiple. While sales per share maintained a steady upward trajectory throughout the five-year period, the price-to-sales ratio peaked early and subsequently declined, indicating a contraction in the valuation premium attributed to the company's revenue.
- Sales per Share Trend
- A consistent year-over-year increase is observed in sales per share, rising from 18.04 US$ in 2018 to 21.64 US$ in 2022. This represents a steady growth in the company's ability to generate revenue on a per-share basis, reflecting positive operational performance.
- Share Price Movement
- The share price experienced growth for three consecutive years, climbing from 66.70 US$ in 2018 to a peak of 79.15 US$ in 2021. However, this trend reversed in 2022, with the price declining to 72.77 US$.
- Price to Sales (P/S) Ratio Analysis
- The P/S ratio rose from 3.70 in 2018 to a peak of 4.16 in 2019. Following this peak, the ratio entered a period of gradual decline, falling to 4.06 in 2020, 3.82 in 2021, and reaching a period low of 3.36 by 2022. This downward trend in the multiple occurs despite the continuous growth in sales per share, suggesting that the market valuation of each dollar of sales has diminished over time.
The compression of the P/S ratio in the final year of the analysis is particularly notable, as it was driven by the simultaneous occurrence of a declining share price and an increasing sales per share figure. This indicates a shift in investor sentiment or a broader market repricing of the company's revenue streams.
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Price to Book Value (P/BV)
Colgate-Palmolive Co., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 830,378,790 | 840,487,222 | 848,562,678 | 855,029,777 | 861,676,494 | |
| Selected Financial Data (US$) | ||||||
| Total Colgate-Palmolive Company shareholders’ equity (in millions) | 401) | 609) | 743) | 117) | (102) | |
| Book value per share (BVPS)2 | 0.48 | 0.72 | 0.88 | 0.14 | -0.12 | |
| Share price1, 3 | 72.77 | 79.15 | 78.72 | 76.27 | 66.70 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 150.69 | 109.24 | 89.90 | 557.38 | — | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Procter & Gamble Co. | 7.42 | 7.40 | — | — | — | |
| P/BV Ratio, Industry | ||||||
| Consumer Staples | 8.11 | 8.15 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
2 2022 Calculation
BVPS = Total Colgate-Palmolive Company shareholders’ equity ÷ No. shares of common stock outstanding
= 401,000,000 ÷ 830,378,790 = 0.48
3 Closing price as at the filing date of Colgate-Palmolive Co. Annual Report.
4 2022 Calculation
P/BV ratio = Share price ÷ BVPS
= 72.77 ÷ 0.48 = 150.69
5 Click competitor name to see calculations.
The analysis of common stock valuation multiples reveals a significant divergence between the market price and the accounting book value of equity over the five-year period ending December 31, 2022.
- Share Price Performance
- The share price exhibited a general upward trajectory from 2018 through 2021, increasing from 66.70 US$ to a peak of 79.15 US$. A moderate contraction was observed in 2022, with the price closing at 72.77 US$.
- Book Value per Share (BVPS) Dynamics
- A negative BVPS of -0.12 US$ was recorded in 2018, indicating a deficit in shareholders' equity. The BVPS shifted to a positive value in 2019 and reached a peak of 0.88 US$ in 2020. Subsequently, a downward trend occurred, with the BVPS declining to 0.48 US$ by the end of 2022.
- Price-to-Book Value (P/BV) Interpretation
- The P/BV ratio was not applicable in 2018 due to the negative book value. Upon the return to a positive BVPS in 2019, the ratio was exceptionally high at 557.38, primarily driven by the minimal positive denominator. Although the ratio decreased to 89.90 in 2020 as the book value improved, it rose steadily thereafter, reaching 150.69 in 2022. This extreme valuation multiple suggests that the market price is driven by factors other than net tangible assets, such as brand equity, intangible assets, or the impact of aggressive share buyback programs that reduce the accounting equity base.
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