Home > Comparison > Consumer Defensive > CL vs EL
The competitive dynamic between Colgate-Palmolive Company and The Estée Lauder Companies Inc. shapes the Consumer Defensive sector’s evolution. Colgate-Palmolive operates as a diversified household and personal products manufacturer with a steady, capital-intensive model. In contrast, Estée Lauder pursues a high-margin, brand-driven approach focused on prestige cosmetics and skincare. This analysis evaluates which strategy offers superior risk-adjusted returns amid shifting consumer preferences and market conditions.
Table of contents
Companies Overview
Two giants shape the household and personal products landscape with distinct strategies and strong brand portfolios.
Colgate-Palmolive Company: Global Consumer Products Leader
Colgate-Palmolive dominates the oral, personal, and home care market with a diverse product range including toothpaste, soaps, and pet nutrition. Its revenue hinges on trusted brands like Colgate and Hill’s Science Diet. In 2026, the firm focuses on expanding its eCommerce reach while sustaining leadership in traditional retail channels.
The Estée Lauder Companies Inc.: Prestige Beauty Powerhouse
Estée Lauder commands the premium cosmetics and skincare segment, generating revenue through a broad portfolio of luxury brands such as MAC and Clinique. Its 2026 strategy targets omnichannel growth, blending upscale department store presence with digital innovation and selective licensing to enhance global market penetration.
Strategic Collision: Similarities & Divergences
Both companies operate in consumer defensive sectors yet diverge sharply in market positioning—Colgate-Palmolive emphasizes mass-market essentials, while Estée Lauder pursues premium beauty. Their core battleground is brand loyalty in personal care, with Colgate relying on volume and Estée Lauder on exclusivity. This contrast shapes distinct risk profiles and growth trajectories for investors.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Colgate-Palmolive Company (CL) | The Estée Lauder Companies Inc. (EL) |
|---|---|---|
| Revenue | 20.38B | 14.29B |
| Cost of Revenue | 8.13B | 3.73B |
| Operating Expenses | 7.90B | 9.60B |
| Gross Profit | 12.25B | 10.56B |
| EBITDA | 3.96B | 0.19B |
| EBIT | 3.33B | -0.64B |
| Interest Expense | 0.27B | 0.40B |
| Net Income | 2.13B | -1.13B |
| EPS | 2.64 | -3.15 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which corporate engine delivers more efficient profit generation and margin management in a challenging market.
Colgate-Palmolive Company Analysis
Colgate’s revenue grew steadily, reaching $20.4B in 2025, but net income declined to $2.13B, reflecting margin pressures. The gross margin holds strong at 60.1%, yet the net margin slipped to 10.5%. Despite a 1.4% revenue increase last year, EBIT fell 21.7%, signaling weakening operational momentum and rising expenses.
The Estée Lauder Companies Inc. Analysis
Estée Lauder’s revenue dropped 8.5% to $14.3B in 2025, with net income plunging to a loss of $1.13B. The firm maintains a high gross margin of 73.9%, but EBIT margin turned negative at -4.45%, and net margin is deeply unfavorable at -7.9%. Declining revenues, negative earnings, and steep margin erosion highlight significant operational challenges.
Margin Stability vs. Earnings Volatility
Colgate outperforms with consistent revenue growth and positive margins despite recent softness. Estée Lauder’s shrinking top line and negative net income underscore severe profitability issues. For investors, Colgate’s stable margin profile and operational resilience present a more reliable earnings engine than Estée Lauder’s current volatility.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of each company:
| Ratios | Colgate-Palmolive Company (CL) | The Estée Lauder Companies Inc. (EL) |
|---|---|---|
| ROE | 13.63% | -29.31% |
| ROIC | 30.56% | 6.44% |
| P/E | 25.73 | -25.68 |
| P/B | 350.65 | 7.53 |
| Current Ratio | 0.92 | 1.30 |
| Quick Ratio | 0.58 | 0.92 |
| D/E (Debt-to-Equity) | 40.15 | 2.44 |
| Debt-to-Assets | 53.05% | 47.45% |
| Interest Coverage | 15.01 | 2.37 |
| Asset Turnover | 1.25 | 0.72 |
| Fixed Asset Turnover | 4.55 | 2.79 |
| Payout Ratio | 61.92% | -54.55% |
| Dividend Yield | 2.41% | 2.12% |
| Fiscal Year | 2024 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as a company’s DNA, unveiling hidden risks and operational strengths critical for investment decisions.
Colgate-Palmolive Company
Colgate-Palmolive posts a strong ROE at 13.6% and healthy net margins of 14.4%, signaling solid profitability. However, its P/E of 25.7 suggests a slightly stretched valuation versus industry averages. The firm rewards shareholders with a 2.4% dividend yield, reflecting steady cash returns rather than aggressive reinvestment.
The Estée Lauder Companies Inc.
Estée Lauder struggles with a negative ROE of -29.3% and a net margin of -7.9%, indicating profitability headwinds. Its P/E ratio is negative, reflecting losses, while the P/B of 7.5 appears expensive relative to assets. The company maintains a 2.1% dividend yield despite operational challenges, balancing payout and growth needs.
Operational Strength vs. Profitability Struggles
Colgate-Palmolive offers better operational efficiency and profitability with a favorable ratio profile. Estée Lauder shows risk with negative earnings but supports shareholders through dividends. Investors seeking stability may prefer Colgate’s profile; risk-tolerant investors might monitor Estée Lauder’s turnaround potential.
Which one offers the Superior Shareholder Reward?
I compare Colgate-Palmolive (CL) and The Estée Lauder Companies (EL) on dividends, payout ratios, and buybacks to find the better shareholder reward in 2026. CL yields 2.4–2.6% with payout ratios near 62–76%, supporting dividends well through strong free cash flow. EL yields about 2.1–2.5% but shows volatile payout ratios, sometimes exceeding 90%, and even negative net income recently, signaling risk. CL maintains steady buybacks funded by solid cash flow and moderate leverage, while EL’s buyback activity is less consistent amid earnings pressure and high debt. I favor CL’s reliable dividend and disciplined buybacks as more sustainable for long-term value. EL’s reinvestment and growth focus is riskier given its margin challenges. For 2026, CL offers the more attractive total return profile with higher distribution sustainability and lower financial risk.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Colgate-Palmolive Company and The Estée Lauder Companies Inc.:
Colgate-Palmolive displays a balanced profile, excelling in ROE (5) and ROA (5), supported by a favorable DCF score (4). However, its debt-to-equity (1) and price-to-book (1) scores are weak, signaling financial leverage risk. Estée Lauder suffers across all metrics, with consistently low scores (1-2), reflecting operational and valuation challenges. Colgate’s strength lies in profitability and asset efficiency, while Estée Lauder depends on a single moderate DCF score, lacking broader financial robustness.
Bankruptcy Risk: Solvency Showdown
Colgate’s Altman Z-Score (6.75) far outpaces Estée Lauder’s (3.25), both in the safe zone but with a clear margin:
This gap indicates Colgate’s stronger solvency and lower bankruptcy risk amid economic cycles. Estée Lauder remains safe but closer to the grey zone, implying vulnerability if market conditions deteriorate.
Financial Health: Quality of Operations
Colgate scores a 6 on the Piotroski F-Score, slightly above Estée Lauder’s 5, indicating better operational quality and financial discipline:
Neither company hits peak financial health (8-9), but Colgate shows fewer red flags in profitability, leverage, and efficiency. Estée Lauder’s average score suggests internal challenges that warrant close monitoring.
How are the two companies positioned?
This section dissects the operational DNA of CL and EL by comparing their revenue distribution and internal dynamics, focusing on strengths and weaknesses. The goal is to confront their economic moats to reveal which model offers the most resilient, sustainable advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how Colgate-Palmolive and Estée Lauder diversify their income streams and reveals their primary sector bets:
Colgate-Palmolive anchors revenue in Oral, Personal and Home Care at $15.6B in 2024, complemented by a smaller $4.5B Pet Nutrition segment. Estée Lauder boasts a more balanced mix: Skin Care leads with $7B, followed by Makeup at $4.2B, Fragrance $2.5B, and Hair Care $0.6B. Colgate’s reliance on one dominant segment poses concentration risk, while Estée Lauder leverages ecosystem diversity to mitigate volatility.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Colgate-Palmolive Company and The Estée Lauder Companies Inc.:
Colgate-Palmolive Company Strengths
- Strong profitability with 14.37% net margin and 30.56% ROIC
- Favorable interest coverage of 12.46
- Diversified product segments including Oral Care and Pet Nutrition
- Consistent asset turnover indicating efficient operations
- Attractive dividend yield of 2.41%
The Estée Lauder Companies Inc. Strengths
- Diverse product portfolio across Skin Care, Makeup, Fragrance, and Hair Care
- Significant global presence with revenues from US, Asia Pacific, and EMEA
- Favorable dividend yield of 2.12%
- PE ratio favorable despite negative earnings
- Neutral liquidity ratios suggest stable short-term financial position
Colgate-Palmolive Company Weaknesses
- Unfavorable valuation metrics with high P/E of 25.73 and PB of 350.65
- Low current and quick ratios indicating potential liquidity risk
- Elevated debt-to-assets ratio at 53.05% and high debt-to-equity of 40.15
- ROE extremely high but potentially distorted
- Moderate leverage could pressure financial flexibility
The Estée Lauder Companies Inc. Weaknesses
- Negative profitability with -7.93% net margin and -29.31% ROE
- Unfavorable interest coverage of -1.57 signals risk in meeting debt costs
- Unfavorable debt level despite neutral debt-to-assets
- Lower asset turnover and fixed asset turnover suggest less operational efficiency
- PB ratio unfavorable at 7.53
The comparison highlights Colgate’s robust profitability and operational efficiency, offset by valuation and liquidity concerns. Estée Lauder’s broad market reach and product diversity contrast with current profitability and leverage challenges. Both face distinct financial trade-offs shaping their strategic priorities.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only lasting shield against competitive erosion that protects a company’s long-term profits:
Colgate-Palmolive Company: Durable Brand and Cost Leadership
Colgate’s moat stems from powerful brand recognition and cost advantage. It delivers high ROIC well above WACC, showing efficient capital use and margin stability. New product innovation and pet nutrition expansion could deepen its moat in 2026.
The Estée Lauder Companies Inc.: Premium Brand with Innovation Risk
Estée Lauder’s moat relies on brand prestige and product innovation but faces margin pressure and declining ROIC. Unlike Colgate, its moat is narrower and challenged by recent unfavorable earnings trends. Growth in Asia-Pacific markets offers some upside.
Brand Strength and Capital Efficiency: Colgate vs. Estée Lauder
Colgate’s wider moat stems from superior ROIC growth and cost advantages, while Estée Lauder struggles with value destruction and margin contraction. Colgate is better positioned to defend its market share amid intensifying competition.
Which stock offers better returns?
Over the past 12 months, Colgate-Palmolive Company’s stock gained 2.52%, showing bullish acceleration. In contrast, The Estée Lauder Companies Inc. declined 22.89%, marking a bearish trend despite recent recovery.
Trend Comparison
Colgate-Palmolive’s 12-month price rose 2.52%, indicating a bullish trend with accelerating momentum and moderate volatility (7.34 std dev). The stock reached a high of 107.86 and a low of 77.05.
The Estée Lauder Companies’ price dropped 22.89% over 12 months, confirming a bearish trend with accelerating decline and high volatility (24.11 std dev). Its range spanned from 52.93 to 154.15.
Colgate-Palmolive delivered the highest market performance, maintaining a positive trend, while Estée Lauder faced a significant downtrend despite recent gains.
Target Prices
Analysts present a clear target price consensus for Colgate-Palmolive and The Estée Lauder Companies.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Colgate-Palmolive Company | 83 | 96 | 89.2 |
| The Estée Lauder Companies Inc. | 70 | 140 | 113.42 |
Colgate-Palmolive’s target consensus sits slightly below its current price of 90.29, suggesting modest downside risk. Estée Lauder’s consensus target offers upside potential versus its 115.28 stock price, reflecting stronger analyst optimism.
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How do institutions grade them?
Colgate-Palmolive Company Grades
The following table summarizes recent grades from reputable institutions for Colgate-Palmolive Company:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | Maintain | Overweight | 2026-01-16 |
| UBS | Maintain | Buy | 2026-01-14 |
| Wells Fargo | Upgrade | Equal Weight | 2026-01-13 |
| TD Cowen | Maintain | Buy | 2026-01-08 |
| Piper Sandler | Upgrade | Overweight | 2026-01-07 |
| JP Morgan | Maintain | Overweight | 2025-12-18 |
| Argus Research | Downgrade | Hold | 2025-12-11 |
| RBC Capital | Upgrade | Outperform | 2025-12-09 |
| Barclays | Maintain | Equal Weight | 2025-11-04 |
| Citigroup | Maintain | Buy | 2025-11-03 |
The Estée Lauder Companies Inc. Grades
The following table summarizes recent grades from reputable institutions for The Estée Lauder Companies Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Telsey Advisory Group | Maintain | Market Perform | 2026-01-30 |
| Deutsche Bank | Maintain | Buy | 2026-01-29 |
| TD Cowen | Maintain | Hold | 2026-01-21 |
| JP Morgan | Maintain | Overweight | 2026-01-16 |
| Citigroup | Maintain | Neutral | 2026-01-14 |
| UBS | Maintain | Neutral | 2026-01-14 |
| Raymond James | Upgrade | Strong Buy | 2026-01-05 |
| Wells Fargo | Maintain | Equal Weight | 2026-01-05 |
| Citigroup | Maintain | Neutral | 2025-12-17 |
| Evercore ISI Group | Maintain | Outperform | 2025-12-16 |
Which company has the best grades?
Colgate-Palmolive holds consistently positive grades, including multiple Buy and Overweight ratings with some upgrades. Estée Lauder’s ratings are more mixed, with a notable Strong Buy from Raymond James but several Neutral and Hold grades. Investors might see Colgate-Palmolive as having steadier institutional confidence.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
Colgate-Palmolive Company
- Operates in a mature, highly competitive consumer products market with strong brand loyalty but slow growth.
The Estée Lauder Companies Inc.
- Faces intense competition in premium cosmetics, highly sensitive to fashion trends and consumer sentiment shifts.
2. Capital Structure & Debt
Colgate-Palmolive Company
- High debt-to-assets ratio at 53%, which is a red flag despite strong interest coverage.
The Estée Lauder Companies Inc.
- Lower debt level but negative interest coverage, signaling potential liquidity stress.
3. Stock Volatility
Colgate-Palmolive Company
- Very low beta (0.28) indicates defensive stock with limited volatility.
The Estée Lauder Companies Inc.
- High beta (1.15) shows sensitivity to market swings and elevated volatility risk.
4. Regulatory & Legal
Colgate-Palmolive Company
- Faces standard consumer product regulations globally, with moderate litigation risk.
The Estée Lauder Companies Inc.
- Operates in cosmetics, facing stricter regulations on ingredients and marketing claims, increasing compliance costs.
5. Supply Chain & Operations
Colgate-Palmolive Company
- Global supply chain with exposure to raw material price fluctuations but diversified manufacturing.
The Estée Lauder Companies Inc.
- Complex supply chain with reliance on specialty ingredients and packaging, vulnerable to disruption.
6. ESG & Climate Transition
Colgate-Palmolive Company
- Strong sustainability initiatives but faces pressure to reduce plastic use and carbon footprint.
The Estée Lauder Companies Inc.
- Increasing focus on ESG amid consumer demand for ethical products; risk of reputational damage if unmet.
7. Geopolitical Exposure
Colgate-Palmolive Company
- Moderate exposure to emerging markets, with some political risk but stable developed market base.
The Estée Lauder Companies Inc.
- Significant exposure to Asia-Pacific and emerging markets, increasing geopolitical and currency risk.
Which company shows a better risk-adjusted profile?
Colgate-Palmolive’s main risk lies in its elevated leverage despite strong operational metrics. Estée Lauder’s biggest risk is its negative profitability and interest coverage, signaling financial strain. I see Colgate’s defensive stock volatility and robust financial health as a better risk-adjusted profile. Estée Lauder’s exposure to volatile markets and weaker financials raise red flags in today’s uncertain environment.
Final Verdict: Which stock to choose?
Colgate-Palmolive’s superpower lies in its durable competitive advantage, delivering strong returns on invested capital well above its cost of capital. Its main point of vigilance is a weaker liquidity position, which could challenge short-term flexibility. This stock suits investors seeking steady value creation in a core defensive portfolio.
The Estée Lauder Companies commands a strategic moat through premium brand equity and recurring revenue streams, offering a safer liquidity profile than Colgate. However, its recent profitability challenges and volatile returns suggest it fits investors embracing GARP strategies, balancing growth potential with risk awareness.
If you prioritize consistent value creation and financial resilience, Colgate-Palmolive outshines due to its robust economic moat and stable profitability. However, if you seek growth with brand-driven pricing power and can tolerate earnings volatility, Estée Lauder offers a compelling scenario for growth-at-a-reasonable-price investors.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Colgate-Palmolive Company and The Estée Lauder Companies Inc. to enhance your investment decisions:
