Dissecting This FMCG Giant – Colgate-Palmolive Company (CL): The Procter & Gamble Company (PG), Unilever N.V. (ADR) (UL)

Industry’s major players

The American FMCG company, The Procter & Gamble Company (NYSE:PG), is trading at a forward P/E (1yr) of 17.63x and has a PEG of 2.38. Incorporating a dividend yield of 2.90% in its PEG gives us a PEGY of 1.7. A mean recommendation of 2.2 on the sell side indicates that Procter & Gamble is one of the top buys in the FMCG sector. Using earnings estimates, I value The Procter & Gamble Company (NYSE:PG) at $85, showing an upside potential of 11%. This makes it one of the most attractive stocks in the industry and a must-buy. You can have a further look at my detailed take on Procter & Gamble here.

On the other hand, Unilever N.V. (ADR) (NYSE:UL), has recently announced that it would be investing 50 million Euros in order to set up a deodorant plant in India. The plant would be built in the Indian state of Maharashtra and would cater to rising demand in South East Asian countries. Unilever N.V. (ADR) (NYSE:UL) has been keen on focusing more on emerging markets such as Latin America and Asia, where the company saw 10% growth last year. In 2013, analysts expect Unilever N.V. (ADR) (NYSE:UL) to earn $2.33 per share on revenue of $70.29 billion.  A mean recommendation of 2.7 on the sell side shows that it isn’t as attractive as Procter & Gamble.

Conclusion

In South America, Colgate-Palmolive Company (NYSE:CL) is still the market leader in toothpastes and toothbrushes, but it has recently faced tough competition from The Procter & Gamble Company (NYSE:PG). As the company dealt successfully with a recent labor slowdown at one of its major units, production levels are expected to remain stable in 2013. However, the devaluation in the Venezuelan currency is bound to have a significant effect on the company’s profits. Thus, 2013 doesn’t look that bright for the FMCG giant. In short, I still remain neutral on Colgate-Palmolive Company (NYSE:CL) in the short run.

The article Dissecting This FMCG Giant originally appeared on Fool.com and is written by Waqar Saif.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.