New York-based Colgate-Palmolive Company (CL) is a global leader in the oral care hygiene market. It produces and distributes household, healthcare, and personal care products. With a market cap of $76.3 billion, it operates through the Oral, Personal & Home Care and Pet Nutrition segments.
The oral hygiene giant has lagged behind the broader market over the past year. Despite surging 18.1% on a YTD basis and 25.8% over the past 52 weeks, Colgate has lagged behind the S&P 500 Index’s ($SPX) around 20% gains in 2024 and 31.3% returns over the past year.
However, narrowing the focus, Colgate has outperformed the Consumer Staples Select Sector SPDR Fund’s (XLP) 11.8% gains on a YTD basis and 17.1% returns over the past year.
Despite reporting better-than-expected earnings and revenue growth, CL stock plunged 4.1% after the release of its Q3 earnings on Oct. 25. The company reported a 2.4% year-over-year growth in net sales, reaching $5 billion, driven by a 6.8% surge in overall organic sales, exceeding Wall Street’s topline expectations. Moreover, due to effective cost management Colgate observed a notable expansion in its gross and operating margins, resulting in a 5.8% growth in base business EPS compared to the year-ago quarter to $0.91, surpassing analysts' earnings estimates by 3.4%.
Although Colgate’s overall performance remained impressive, the company observed a net sales decline from two of its major revenue-contributing regions. Its net sales from the North American region declined 2.1% while Latin America’s net sales dropped 3.2% compared to the year-ago quarter, making investors jittery.
For the current fiscal year, ending in December, analysts expect Colgate-Palmolive to report an 11.2% year-over-year growth in adjusted EPS to $3.59. Moreover, the company has a robust earnings surprise history, it has surpassed Wall Street’s earnings estimates in each of the past four quarters.
CL stock has a consensus “Moderate Buy” rating overall. Among the 23 analysts covering the stock, 11 recommend “Strong Buy,” two advise “Moderate Buy,” nine suggest “Hold,” and one has a “Strong Sell” rating.
This configuration is less bullish than three months ago when 13 analysts recommended “Strong Buy” ratings.
On Oct. 28, TD Cowen analyst Robert Moskow maintained a “Buy” rating but lowered the firm’s price target to $110.
The mean price target of $106.09 represents a premium of 13.7% to current price levels while the Street-high target of $121 suggests a potential upside of 29.6%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
