) is the world leader in oral care with close to a 35% share of the
$18 billion global market comprising of toothpaste, toothbrush,
mouthwash, dental floss etc. It also makes soaps, shampoos, dish
wash and surface cleaners, fabric conditioners, deodorants and pet
nutrition supplements, and is one of the leading players in
personal care industry competing with companies like Procter &
). Colgate sells in over 200 countries across the globe resulting
in over three-fourth of net sales coming from outside US.
Colgate-Palmolive's stock with a Trefis price
estimate of $85
, at close to a 8% premium to its current market price. We believe
oral care makes up over 44% of Trefis price estimate with soaps,
shampoos and deodorants together constituting 25% of its stock.
Given the breadth of Colgate-Palmolive's products range and
inspired by a similar breakdown by products segment of P&G's
value that we examined in a previous article, we decided to explore
how different product segments bear varying significance on
Among the product segments in which Colgate-Palmolive competes,
the segments that we believe will be the most crucial to Colgate
are those that constitute a higher proportion of current
revenues and/or those that have the highest expected revenue
growth. We approximate Colgate's revenue growth by estimating the
overall growth in the market size combined with an incremental
growth component on account of market share gains.
The following chart summarizes our estimates of
Colgate-Palmolive's business over the next five years (2011-16)
Percentages in parenthesis represent each product segment's
contribution to Colgate-Palmolive's current revenues. The
horizontal bars illustrate our estimates for compound annual
growth rate (CAGR) of 2011-16 revenues, split between growth in
market size (in blue) and growth due to Colgate-Palmolive's
market share gains (in red) across each product segment.
Oral Care market shall continue to be the most crucial for
Colgate. It currently makes up 45% of Colgate's revenues and is
poised for an equally impressive growth of 6.3% year-on-year. A
significant portion of this growth comes from the fact that Colgate
enjoys a lot of brand awareness and consumer recall that shall
translate into market share gains.
Hair Care comes next with its 19% contribution to Colgate's
revenues with 4.8% growth in overall hair care market and 2.1%
growth on account of market share gains from Palmolive and Caprice
shampoos and hair conditioners.
Colgate-Palmolive might be the market leader in fabric
conditioners with leading brands such as Suavitel in Latin America
and Soupaline in Europe but since fabric conditioners itself
constitute a very small percentage of the laundry market, we do not
expect laundry segment with its low market growth rate to bear much
significance to Colgate's total value, going forward.
We believe Deodorants & Antiperspirants have an impressive
growth outlook but since they currently constitute a very small
percentage of total revenues at around 3%, we do not see
Colgate-Palmolive drawing much value from this segment in the near
We believe these segments offer the most growth for Colgate and
could contribute to the stock price.
See our full analysis for Colgate-Palmolive's stock