Procter & Gamble vs Colgate-Palmolive

http://www.fool.com/investing/general/2009/12/09/better-buy-pg-or-cl.aspx
By Motley Fool Staff December 9, 2009

=> good articles with comparison on important factors. One thing Motley Fool didn't mention is the weight on each of those factors are in fact different.
=> As a consumer staple company, P/E ratio is always important, net margin is the 2nd and follow by sales growth (not earnings), debt equity ratio proper & return on equity are less important.

In a new Motley Fool series, we pit two stocks against each other on five criteria to determine the better buy.
Today's matchup is Procter & Gamble (NYSE: PG) vs. Colgate-Palmolive (NYSE: CL). Using five short-of-scientific-but-carefully chosen criteria, let's determine which is the better buy according to the numbers:

Procter & Gamble vs Colgate-Palmolive

1. P/E ratio: 14.6 vs 20.2
2. 5 year growth rate: 8.4% vs 10.7%
3. net margin: 14.3% vs 14.46%
4. debt equity ratio: 0.54 vs 1.17
5. # of stars: ***** vs ****

Round 1: Cheapness
Advantage: Procter & Gamble. Cheapness is determined by P/E ratio. The lower the better. Be careful of earnings near zero that skew the ratio, one-time gains and losses, and pasts that aren’t indicative of futures (the more dynamic the industry, the more this is true).

Round 2: Growth
Advantage: Colgate-Palmolive. Growth here is the trailing 5-year EPS growth rate. This trailing earnings growth helps put notoriously-optimistic Wall Street projections in perspective.

Round 3: Operations
Advantage: Colgate-Palmolive. Net margin percentage shows how efficiently a company turns revenue into profit. The more similar the business models, the more relevant the comparison.

Round 4: Balance sheet
Advantage: Procter & Gamble. As with net margins, the debt to capital ratio is most relevant in comparing companies in similar industries. In this battle we give the nod to the lower-debt company, but attention should also be paid to the cost of debt, interest coverage ratios, and the stability of the business (the more stable a company’s operations, the more debt it can safely carry).

Round 5: CAPS rating
Advantage: Procter & Gamble. A company’s CAPS rating is our community’s opinion of the stock. You can get more information on your stocks -- and our community’s opinions of those stocks -- by clicking over to CAPS area.

Each of these five rankings need more context -- like, how these companies stack up against key competitors such as Kimberly-Clark (NYSE: KMB) and Clorox (NYSE: CLX). But these basic numbers suggest that Procter & Gamble is a better buy. What do you think? Let us know in the comments section below.