Analyzing Colgate-Palmolive (NYSE:CL) & Reynolds Consumer Products (NASDAQ:REYN)

Reynolds Consumer Products (NASDAQ:REYN) and Colgate-Palmolive (NYSE:CL) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Dividends

Reynolds Consumer Products pays an annual dividend of $0.92 per share and has a dividend yield of 4.1%. Colgate-Palmolive pays an annual dividend of $2.12 per share and has a dividend yield of 2.3%. Reynolds Consumer Products pays out 56.1% of its earnings in the form of a dividend. Colgate-Palmolive pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Colgate-Palmolive has raised its dividend for 63 consecutive years. Reynolds Consumer Products is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

26.8% of Reynolds Consumer Products shares are held by institutional investors. Comparatively, 80.4% of Colgate-Palmolive shares are held by institutional investors. 0.4% of Reynolds Consumer Products shares are held by insiders. Comparatively, 0.4% of Colgate-Palmolive shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Reynolds Consumer Products and Colgate-Palmolive”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reynolds Consumer Products	$3.72 billion	1.28	$301.00 million	$1.64	13.82
Colgate-Palmolive	$21.05 billion	3.51	$2.13 billion	$2.52	36.75

Colgate-Palmolive has higher revenue and earnings than Reynolds Consumer Products. Reynolds Consumer Products is trading at a lower price-to-earnings ratio than Colgate-Palmolive, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Reynolds Consumer Products and Colgate-Palmolive, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reynolds Consumer Products	0	7	1	0	2.12
Colgate-Palmolive	0	7	13	0	2.65

Reynolds Consumer Products currently has a consensus price target of $25.20, suggesting a potential upside of 11.21%. Colgate-Palmolive has a consensus price target of $97.95, suggesting a potential upside of 5.77%. Given Reynolds Consumer Products’ higher possible upside, research analysts clearly believe Reynolds Consumer Products is more favorable than Colgate-Palmolive.

Profitability

This table compares Reynolds Consumer Products and Colgate-Palmolive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reynolds Consumer Products	9.11%	16.03%	7.28%
Colgate-Palmolive	9.68%	464.63%	18.34%

Volatility & Risk

Reynolds Consumer Products has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, Colgate-Palmolive has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Summary

Colgate-Palmolive beats Reynolds Consumer Products on 13 of the 17 factors compared between the two stocks.

About Reynolds Consumer Products

Reynolds Consumer Products Inc. produces and sells products in cooking, waste and storage, and tableware product categories in the United States and internationally. It operates through four segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products. The Reynolds Cooking & Baking segment produces aluminum foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, butcher paper, plastic wrap, baking cups, oven bags, and slow cooker liners under the Reynolds Wrap, Reynolds KITCHENS, and EZ Foil brands in the United States, as well as under the ALCAN brand in Canada and under the Diamond brand internationally. The Hefty Waste & Storage segment offers trash bags under the Hefty Ultra Strong and Hefty Strong brands; and food storage bags under the Hefty and Baggies brands. This segment also provides a suite of products, including compostable bags, bags made from recycled materials, and the orange bags. The Hefty Tableware segment offers disposable and compostable plates, bowls, platters, cups, and cutlery under the Hefty brand. The Presto Products segment primarily sells store brand products in food storage bags, trash bags, reusable storage containers, and plastic wrap categories. It offers both branded and store brand products to grocery stores, mass merchants, warehouse clubs, discount chains, dollar stores, drug stores, home improvement stores, military outlets, and eCommerce retailers. The company was founded in 1947 and is headquartered in Lake Forest, Illinois. Reynolds Consumer Products Inc. is a subsidiary of Packaging Finance Limited.

About Colgate-Palmolive

Colgate-Palmolive Company, together with its subsidiaries, manufactures and sells consumer products in the United States and internationally. It operates through two segments: Oral, Personal and Home Care; and Pet Nutrition. The Oral, Personal and Home Care segment offers toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants, skin health products, dishwashing detergents, fabric conditioners, household cleaners, and other related items. This segment markets and sells its products under various brands, which include Colgate, Darlie, elmex, hello, meridol, Sorriso, Tom's of Maine, Irish Spring, Palmolive, Protex, Sanex, Softsoap, Lady Speed Stick, Speed Stick, EltaMD, Filorga, PCA SKIN, Ajax, Axion, Fabuloso, Murphy, Suavitel, and Soupline to a range of traditional and eCommerce retailers, wholesalers, and distributors. It includes pharmaceutical products for dentists and other oral health professionals. Its Pet Nutrition segment offers pet nutrition products for everyday nutritional needs under the Hill's Science Diet brand; and a range of therapeutic pet products to help nutritionally support dogs and cats in different stages of health under the Hill's Prescription Diet brand. This segment markets and sells its products through pet supply retailers, veterinarians, and eCommerce retailers. Colgate-Palmolive Company was founded in 1806 and is headquartered in New York, New York.