At Valuecruncher we have previously looked at Proctor & Gamble (PG). Competitor Colgate Palmolive (CL) announced strong Q3 results at the end of October. $CL is trading close to a 52-week low at US$63.55. So how does the current share price of $CL look from an intrinsic value perspective?

Valuecruncher valuation model of $CL with interactive assumptions

Valuecruncher produces a valuation of US$75.96 for $CL. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 19.5% above the current share price of US$58.76.

Assumptions

• Revenue: Reuters aggregates 12 analysts covering $CL and these analysts have mean estimates of 2008 and 2009 revenues of US$15.7 billion and US$16.8 billion respectively. For our analysis we have used US$15.5 billion in 2008, US$16.5 billion in 2009 and US$17.5 billion in 2010.
• Profitability: We have used a flat EBITDA margin of 22.0% to 2010. Reuters has $CL‘s EBITD margin at 21.5% last year and 22.9% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of US$600.0 million per annum moving forward.
• Discount Rate: 8.0%.
• Terminal Growth Rate: 3.0%.

Our analysis incorporates the cash and debt the $CL balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None