Colgate-Palmolive Company CL is expected to register top and bottom-line growth when it reports its fourth-quarter 2024 numbers on Jul 31, before the opening bell. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $5 billion, indicating a rise of 1.2% from the year-ago quarter’s reported figure.
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The consensus estimate for the company’s earnings is pegged at 89 cents per share, suggesting growth of 2.3% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings for the quarter has moved up by a penny in the past 30 days.
In the last reported quarter, the company's earnings beat the consensus estimate by 3.4%. It has delivered an earnings surprise of 3.8%, on average, in the trailing four quarters.
Colgate-Palmolive Company Price and EPS Surprise
Colgate-Palmolive Company price-eps-surprise | Colgate-Palmolive Company Quote
What the Zacks Model Unveils for CL
Our proven model does not conclusively predict an earnings beat for Colgate this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Colgate currently has an Earnings ESP of -0.91% and a Zacks Rank of 3.
Key Aspects to Note About CL
CL’s fourth-quarter 2024 performance is expected to have benefited from a solid business momentum, supported by pricing, funding-the-growth and other productivity initiatives. The company’s idea of delivering balanced organic sales growth, driven by improvements in all categories and divisions, and volume and pricing gains, has been driving its performance. CL’s brand strength, coupled with its focus on innovation, premiumization and digital transformation, is expected to have driven its performance in the to-be-reported quarter.
Our model predicts organic sales growth of 6.5% for fourth-quarter 2024, with an improvement of 12% in Latin America, 9% in Europe, 6.5% in the Asia Pacific, 11% in Africa/Eurasia and 6.5% in Pet Nutrition, offset by 2.5% in North America. We expect volume growth of 4% and pricing gains of 2.5% for the fourth quarter.
Additionally, the company has been delivering a sequential rise in the gross margin for the past few quarters, driven by continued strong pricing, benefits from revenue growth management initiatives, strength in the funding-the-growth program and other productivity initiatives. Continued gains from these initiatives are expected to have led to a gross margin expansion in the to-be-reported quarter.
We expect the adjusted gross margin to expand 210 basis points (bps) to 61.7% in the fourth quarter, with a 5.6% year-over-year rise in adjusted gross profit on a dollar basis.
The leading global consumer products company has been aggressively expanding its faster-growth channels while extending the geographic footprint of its brands. Its efforts to improve product availability through enhanced distribution across existing and new markets are likely to have driven its performance in the quarter under review.
However, Colgate has been witnessing headwinds related to continued volume softness in China and the expected headwind from lower private label growth as it transferred more of Hill’s volume into the pet nutrition manufacturing network. The effects of these headwinds are anticipated to slightly mar the company’s top-line performance in the to-be-reported quarter.
Also, higher raw material costs and the inflationary foreign exchange headwinds have been partly offsetting growth in the gross margin. On the last reported quarter’searnings call management stated that although it expects the sequential margin improvement trend to continue, growth is likely to be slightly offset by headwinds related to transactional foreign exchange and higher raw material costs.
The company has been committed to investing in capabilities like digital, data and analytics, leading to higher SG&A expenses. We expect this trend to have continued into the fourth quarter of 2024.
We anticipate SG&A expenses to increase 6.9% year over year in the fourth quarter. As a percentage of sales, SG&A expenses are expected to rise 180 bps year over year to 38.2% in the to-be-reported quarter.
CL’s Price Performance & Valuation
Colgate’s shares have exhibited an uptrend, rising as much as 8.7% in the past year. The stock has surpassed the broader industry growth of 0.9% and the Consumer Staples sector’s decline of 3.3%. However, the CL stock has underperformed the S&P 500 index, which grew 24.8% in the same period.
Colgate’s One-Year Stock Price Performance
Image Source: Zacks Investment Research
From the valuation standpoint, CL trades at a forward 12-month P/E multiple of 24.04X, exceeding the industry average of 21.43X and the S&P 500’s average of 22.64X. Colgate’s valuation appears quite pricey.
Stocks With Favorable Combination
Here are some companies, which, according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Clorox CLX has an Earnings ESP of +0.06% and a Zacks Rank of 3 at present. CLX is likely to register top and bottom-line declines when it releases second-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.6 billion, which suggests a decline of 17.8% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Clorox’s quarterly earnings has moved up 1.4% in the past 30 days to $1.40 per share, suggesting a decline of 35.2% from the year-ago quarter’s reported number. CLX has delivered an earnings surprise of 45.9%, on average, in the trailing four quarters.
Church & Dwight Co. CHD currently has an Earnings ESP of +0.11% and a Zacks Rank of 3. CHD is anticipated to register top and bottom-line growth when it reports fourth-quarter 2024 results. The Zacks Consensus Estimate for Church & Dwight’s quarterly revenues is pegged at $1.6 billion, indicating growth of 2.4% from the figure reported in the year-ago quarter.
The consensus estimate for Church & Dwight’s earnings has been unchanged in the past 30 days at 77 cents per share. The consensus estimate suggests an 18.5% increase from the year-ago quarter’s reported figure. CHD has delivered an earnings beat of 10%, on average, in the trailing four quarters.
e.l.f. Beauty ELF has an Earnings ESP of +3.60% and a Zacks Rank of 3 at present. ELF is likely to register top and bottom-line growth when it releases fourth-quarter 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $329.5 million, implying growth of 21.6% from that reported in the year-ago quarter.
The consensus estimate for e.l.f. Beauty’s quarterly earnings has moved down by a penny in the past 30 days to 76 cents per share, indicating growth of 2.7% from the year-ago quarter’s reported number. ELF has a trailing four-quarter average earnings surprise of 45.1%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Colgate-Palmolive Company (CL) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
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