Colgate-Palmolive vs. Hershey: Which Consumer Goods Stock Is the Better Buy for 2027?
Both of these defensive stocks are growing sales about 6%, but one offers a higher yield and a lower valuation as cocoa costs weigh on its shares.
As the world faces market uncertainty, many investors seek stable dividends and well-known companies. Colgate-Palmolive (CL) and Hershey (HSY) are two such giants to consider for long-term investment. Colgate-Palmolive is a global leader in oral care and hygiene, with products sold in over 200 countries. Its Hill's Pet Nutrition segment contributes significantly to its growth.
In the last year, Colgate reported $21 billion in revenue, growing 6% year-over-year, and $2 billion in net income. The company has a debt-to-equity ratio of 12x and a current ratio of 1x, indicating its ability to meet short-term obligations. Hershey, on the other hand, is a snacking powerhouse with a portfolio of more than 70 brands.
The company primarily focuses on its North American confection and snacking segments while gradually expanding internationally. Hershey's TTM revenue was $12.2 billion, a 6.7% increase from the previous year, and net income was $1.8 billion. Its debt-to-equity ratio is 1.1x, and current ratio is 1.2x, showcasing its ability to handle short-term liabilities.
Hershey's TTM free cash flow is close to $2.1 billion. While Colgate faces risks from international instability, Hershey contends with commodity market volatility, mainly cocoa, and the integration of acquisitions. Hershey also offers a higher yield of 3.4% compared to Colgate's 2.2%, making it an attractive option for income-focused investors.
Despite Hershey's challenges, its consistent revenue growth and attractive valuation metrics, such as a lower Forward P/E and P/S ratio, make it a compelling choice for long-term investors seeking value in the consumer goods sector.
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