VALUATION HIGHLIGHTS

1. Oral, Home, Personal Care constitutes 77% of the Trefis price estimate for Colgate-Palmolive's stock.
2. Hill's Pet Nutrition constitutes 23% of the Trefis price estimate for Colgate-Palmolive's stock.

WHAT HAS CHANGED?

1. CL Stock vs. S&P 500 Performance
   • The changes in CL stock over the recent years have been far from consistent.
   • Returns for the stock were 2% in 2021, -5% in 2022, 4% in 2023, and 17% in 2024.
   • In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that CL underperformed the S&P in 2021, 2023 and 2024.

2. Q4'24 Earnings
   • Colgate-Palmolive's Q4 2024 net sales were $4.9 billion, a slight decrease of 0.1% year-over-year.
   • However, the company saw strong organic growth of 4.3%, driven by a 2.5% increase in volume and a 1.8% improvement in pricing.
   • The adjusted operating margin remained stable at 21.5%, and adjusted EPS rose by 5% to $0.91, up from $0.87 in Q4 2023.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

1. Colgate-Palmolive's Oral, Personal, & Home Care EBITDA Margin :
   • Colgate-Palmolive's Oral, Personal, & Home Care EBITDA margin has historically ranged from 25% to 30% and is currently at 26.4% as of 2024.
   • We project that cost-saving initiatives will boost this margin to around 29% within our forecast period.
   • However, if input costs and currency headwinds stabilize and marketing expenses decrease due to a shift towards digital and social media advertising, margins could potentially reach 35%, representing an approximate 15% upside to the Trefis price estimate.
   • Conversely, if Colgate-Palmolive struggles to improve its margin due to pricing pressures and competition, and it remains around 25% in the coming years, our price estimate for CL would face a potential downside of 10%.

BUSINESS SUMMARY

Colgate-Palmolive stands as a global multinational corporation engaged in the manufacturing, marketing, and distribution of products across four core categories: Oral Care (including toothpaste, toothbrushes, mouthwash, dental floss), Personal Care (soaps, shampoos), Home Care (detergents, cleaners), and Pet Nutrition. The company possesses a significantly diversified geographic footprint, with operations in over 200 countries and territories and generating approximately 80% of its net sales from outside the North America region.

As a global leader in Oral Care, Colgate-Palmolive holds leading market shares for its toothpaste and manual toothbrush brands across many parts of the world. Key Oral Care products include Colgate Total and Colgate Max Fresh toothpastes, Colgate 360° manual toothbrushes, Colgate Plax mouth rinses, dental floss, and pharmaceutical items designed for dentists and oral health professionals.

In the Home Care segment, Colgate-Palmolive manufactures and markets a diverse portfolio including Palmolive and Ajax dishwashing liquids, Fabuloso and Ajax household cleaners, and Murphy's Oil Soap. The company is also a market leader in fabric conditioners, featuring prominent brands like Suavitel in Latin America and Soupline in Europe.

Colgate-Palmolive is also recognized as a global leader in liquid hand soap. Its Personal Care offerings encompass Palmolive and Softsoap brand shower gels, Palmolive, Irish Spring, and Protex bar soaps, along with Speed Stick/Lady Speed Stick deodorants. Outside the U.S., the Personal Care business extends to include Palmolive and Caprice shampoos and conditioners.

Through its Hill's Pet Nutrition division, Colgate-Palmolive is a global frontrunner in specialty pet nutrition for dogs and cats. Hill's primarily markets pet foods under two trademarks: 1) Science Diet, available through authorized pet supply retailers and veterinarians for everyday nutritional needs, and 2) Prescription Diet, a line of therapeutic products distributed by veterinarians to aid in the nutritional management of disease conditions in dogs and cats.

SOURCES OF VALUE

Trefis believes that Colgate-Palmolive's Oral Care business is its most valuable component because of the following reasons:

Oral Care market share

Colgate-Palmolive holds a significant position in the multi-billion dollar global oral care market. The company commands leading global market shares, particularly in toothpaste (around 40%) and manual toothbrushes (around 30%). This strong market position stems largely from its extensive geographic reach, especially within emerging markets across Latin America and Asia, where it sometimes approaches near-monopoly status in oral health categories. This significant market share, built on decades of brand equity and consumer loyalty, allows Colgate to effectively reach a vast consumer base and defend its position against major competitors (like Procter & Gamble's Oral-B) and private label brands. In contrast, Colgate-Palmolive's share in the combined global markets for deodorants, bath and shower products, and hair care (collectively valued at over $170 billion in 2025) remains considerably smaller.

KEY TRENDS

Colgate's marketing initiatives

Colgate employs several key marketing strategies to bolster brand popularity among consumers and dental professionals, contributing to its products' strong market performance.

• "Shopper Marketing" involves analyzing consumer behavior in stores to convert shoppers into buyers. Colgate has leveraged its partnerships with neighborhood stores and supermarkets to offer trial packs, as well as helping create awareness among consumers regarding the benefits of oral health care through messages on prescription bags and better in-store displays.
• Colgate collaborates extensively with dental care professionals to disseminate oral health education, distribute free samples, and offer dental screenings, particularly targeting children and families to foster early adoption of oral care routines. Building credibility, for instance by inviting professionals to tour Colgate's Global Technology Center, strengthens endorsements for its toothpaste brands.



Product innovation to drive higher margins and increase sales of premium priced brands


Colgate-Palmolive consistently introduces innovative products each quarter to maintain consumer engagement and brand relevance. A key strategic focus is on "margin-accretive" innovation – developing products offering specific added benefits that command premium pricing. CL has launched several new products in the past and continues to improve its existing product line. These innovations not only help Colgate-Palmolive drive top-line growth and defend its market share, but also add to the bottom-line due to their higher pricing.


Strong partnership with customers and suppliers


A cornerstone of Colgate-Palmolive's growth strategy involves fostering strong partnerships. The company works closely with its diverse customer base, including numerous small shop owners, store owners and other retailers, to gain insights into consumer behavior and preferences. This feedback directly informs Colgate-Palmolive's active R&D and marketing efforts, enabling the creation of products that deliver greater consumer value. Furthermore, Colgate-Palmolive cultivates relationships with dental and veterinary professionals to build consumer trust, secure endorsements, and foster long-term brand loyalty for its major Oral Care and high-growth Pet Nutrition businesses.