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The Colgate-Palmolive (NYSE:CL) Share Price Has Gained 11% And Shareholders Are Hoping For More

Colgate-Palmolive Company (NYSE:CL) shareholders might be concerned after seeing the share price drop 12% in the last quarter. Taking a longer term view we see the stock is up over one year. In that time, it is up 11%, which isn't bad, but is below the market return of 40%.

See our latest analysis for Colgate-Palmolive

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Colgate-Palmolive was able to grow EPS by 14% in the last twelve months. This EPS growth is significantly higher than the 11% increase in the share price. So it seems like the market has cooled on Colgate-Palmolive, despite the growth. Interesting.

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You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
earnings-per-share-growth

We know that Colgate-Palmolive has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Colgate-Palmolive's TSR for the last year was 14%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Colgate-Palmolive shareholders gained a total return of 14% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 4% per year over five year. It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Colgate-Palmolive is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.