New York City-based Colgate-Palmolive Company (CL) is a global manufacturer and seller of consumer products, operating through various segments including Oral, Personal, Home Care, and Pet Nutrition. Similarly, Kimberly-Clark Corporation (KMB), also based in New York City, specializes in personal care and consumer tissue products through segments like Personal Care, Consumer Tissue, and K-C Professional.
The stock market closed lower in its last session amid concerns over the Russia-Ukraine war and anticipated Fed rate increases. The consumer defensive sector, known for stable demand, may thrive in the face of higher energy prices and interest rates. Both CL and KMB are well-positioned in this sector.
In terms of stock performance, CL and KMB have seen declines over the past year, with CL declining 2.1% and KMB declining 10.8% in price. However, recent developments such as CL’s increased dividend and share repurchase program, as well as KMB’s acquisition of Thinx, Inc., reflect their ability to generate cash and drive growth.
Financially, CL has shown growth in revenue and EPS, with analysts projecting further increases in the coming years. On the other hand, KMB has seen mixed results with a decline in adjusted net income and EPS for the fiscal fourth quarter.
In terms of profitability, CL outperforms KMB with higher margins and returns on equity, assets, and invested capital. Valuation-wise, KMB has a higher forward non-GAAP PEG ratio, while CL has a higher forward non-GAAP P/E multiple.
According to POWR Ratings, CL has an overall B rating compared to KMB’s C rating, with CL showing higher profitability and stability. In conclusion, considering CL’s higher profit margins, it may be a better buy in the consumer defensive sector.
As of Tuesday, CL shares were trading at $75.53 per share, up 2.12%. Year-to-date, CL has declined 11.01%, while the S&P 500 index has risen 10.55% during the same period.
About the Author: Anushka Dutta is an analyst with a keen interest in understanding the impact of economic changes on financial markets, driving her career in investment research.