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Colgate-Palmolive Company (CL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Colgate-Palmolive Company (CL)

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Intrinsic Value (DCF)

Current$82.96
→
Intrinsic$75.43
-9%
$47.74$75.43$130.56
Market implies 10% growth for 5 years
CL appears fairly valued — current price aligns with our DCF estimate.
At $83, the market prices in 10% annual cash flow growth — a moderate expectation aligned with historical trends (8%).
Range: Bear $48 → Bull $131. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →4%6%8%10%
8%$94$104$114$125
10%$62$69$75$83
12%$45$50$55$61
14%$35$39$43$47

Bull Case

  • Bull case ($131) offers 57% upside at 10% growth, 8% discount
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Bear case ($48) implies 42% downside at 6% growth, 12% discount
  • Price reflects 10% growth expectations vs 8% historical — high bar to clear
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5-Year Free Cash Flow Projection

Year 1$3.83B
Year 2$4.14B
Year 3$4.47B
Year 4$4.82B
Year 5$5.21B
Terminal$82.56B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.55BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CL stock undervalued or overvalued?
🟡 FAIRLY VALUED

CL trades at $82.96, within 10% of our $75.43 intrinsic value estimate. At 9.5% WACC and 8.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $51.09 (bear) to $109.11 (bull).

What is CL's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.55B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $7.42B net debt and dividing by 0.82B shares: Bear $51.09 | Base $75.43 | Bull $109.11. Current price $82.96 implies -2% to base case.

How is CL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($69.46B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 19.6x.