Investment Thesis
Colgate exhibits strong operational fundamentals with healthy 60%+ gross margins and solid free cash flow generation of 609M, but is severely overleveraged with a debt-to-equity ratio of 54.74x and stockholders' equity of only 145M, creating substantial financial risk despite manageable 3.2x interest coverage.
Strengths
- Exceptional gross margin of 60.6% reflects strong pricing power and brand value
- Robust free cash flow of 609M (11.4% FCF margin) provides debt servicing capacity
- Stable operating margin of 18.1% demonstrates consistent operational efficiency
Risks
- Extreme leverage with debt-to-equity of 54.74x and minimal equity cushion (145M) poses significant financial distress risk
- Tight liquidity with current ratio of 1.02x and quick ratio of 0.67x limits financial flexibility for downturns
- EPS declined 25.1% YoY despite flat net income, signaling shareholder dilution or increased share count
Key Metrics to Watch
- Debt-to-equity ratio trend and refinancing risk given long-term debt of 7.9B
- Free cash flow sustainability and ability to deleverage
- Revenue growth acceleration beyond 1.4% YoY to offset leverage concerns
Financial Metrics
Revenue
5.3B
Net Income
646.0M
EPS (Diluted)
$0.80
Free Cash Flow
609.0M
Total Assets
16.6B
Cash
1.3B
Profitability Ratios
Gross Margin
60.6%
Operating Margin
18.1%
Net Margin
12.1%
ROE
445.5%
ROA
3.9%
FCF Margin
11.4%
Balance Sheet & Liquidity
Current Ratio
1.02x
Quick Ratio
0.67x
Debt/Equity
54.74x
Debt/Assets
97.1%
Interest Coverage
3.22x
Long-term Debt
7.9B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T12:06:00.668264 |
Data as of: 2026-03-31 |
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