Estee Lauder Companies, Inc. (The) (NYSE: EL) and Colgate-Palmolive Company (NYSE:CL) are both large-cap consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, valuation, institutional ownership, risk and dividends.

Insider and Institutional Ownership

54.3% of Estee Lauder Companies, Inc. (The) shares are owned by institutional investors. Comparatively, 73.5% of Colgate-Palmolive Company shares are owned by institutional investors. 17.0% of Estee Lauder Companies, Inc. (The) shares are owned by insiders. Comparatively, 1.0% of Colgate-Palmolive Company shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Estee Lauder Companies, Inc. (The) has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Colgate-Palmolive Company has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.

Profitability

This table compares Estee Lauder Companies, Inc. (The) and Colgate-Palmolive Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Estee Lauder Companies, Inc. (The) 9.62% 33.40% 12.32%
Colgate-Palmolive Company 16.31% 3,725.55% 20.54%

Dividends

Estee Lauder Companies, Inc. (The) pays an annual dividend of $1.36 per share and has a dividend yield of 1.4%. Colgate-Palmolive Company pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. Estee Lauder Companies, Inc. (The) pays out 45.5% of its earnings in the form of a dividend. Colgate-Palmolive Company pays out 57.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Estee Lauder Companies, Inc. (The) has increased its dividend for 53 consecutive years and Colgate-Palmolive Company has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Estee Lauder Companies, Inc. (The) and Colgate-Palmolive Company, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Estee Lauder Companies, Inc. (The) 1 4 13 0 2.67
Colgate-Palmolive Company 0 11 2 0 2.15

Estee Lauder Companies, Inc. (The) currently has a consensus target price of $96.93, indicating a potential upside of 1.70%. Colgate-Palmolive Company has a consensus target price of $74.73, indicating a potential upside of 3.09%. Given Colgate-Palmolive Company’s higher probable upside, analysts plainly believe Colgate-Palmolive Company is more favorable than Estee Lauder Companies, Inc. (The).

Valuation & Earnings

This table compares Estee Lauder Companies, Inc. (The) and Colgate-Palmolive Company’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Estee Lauder Companies, Inc. (The) $11.58 billion 3.03 $2.35 billion $2.99 31.88
Colgate-Palmolive Company $15.20 billion 4.21 $4.43 billion $2.77 26.17

Colgate-Palmolive Company has higher revenue and earnings than Estee Lauder Companies, Inc. (The). Colgate-Palmolive Company is trading at a lower price-to-earnings ratio than Estee Lauder Companies, Inc. (The), indicating that it is currently the more affordable of the two stocks.

Summary

Colgate-Palmolive Company beats Estee Lauder Companies, Inc. (The) on 10 of the 17 factors compared between the two stocks.

Estee Lauder Companies, Inc. (The) Company Profile

The Estee Lauder Companies Inc. manufactures and markets skin care, makeup, fragrance and hair care products. The Company offers products, including skin care, makeup, fragrance, hair care and other. The Company operates in beauty products segment. The Company’s products are sold in over 150 countries and territories under brand names, including Estee Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, MAC, Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, AERIN, Tory Burch, RODIN olio lusso, Le Labo, Editions de Parfums Frederic Malle, GLAMGLOW, By Kilian, BECCA and Too Faced. Its skin care products include moisturizers, serums, cleansers, toners, body care, exfoliators, acne and oil correctors, facial masks, cleansing devices and sun care products.

Colgate-Palmolive Company Company Profile

Colgate-Palmolive Company (Colgate) is a consumer products company. The Company operates in two product segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care product segment is operated through five geographic segments, which include North America, Latin America, Europe, Asia Pacific and Africa/Eurasia. The Company’s oral care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh and Colgate Optic White. The Company is also engaged in various product categories of the personal care market with operations in liquid hand soap, which it sells under the Palmolive, Protex and Softsoap brands. The Company manufactures and markets a range of products for the home care market, including Palmolive and Ajax dishwashing liquids, Fabuloso and Ajax household cleaners and Murphy’s Oil Soap. The Company, through its Hill’s Pet Nutrition segment (Hill’s), manufactures pet nutrition products for dogs and cats.

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