We have maintained our long-term Neutral recommendation on the
global consumer products company,
) with a target price of $127.00, following its first-quarter
2013 results. Moreover, shares of Colgate-Palmolive carry a Zacks
Rank #3 (Hold).
Why the Reiteration?
Colgate-Palmolive commands a market-leading position in oral care
and personal care product categories. We believe management's
continued focus on product innovation, globally recognized brands
and broad international presence in both developed and emerging
markets facilitate the company to take advantage of growth
opportunities and thereby augment profitability.
This is evident from the company's recent concluded quarter. The
company posted first-quarter 2013 adjusted earnings of $1.32 per
share, up 6% year over year and in line with the Zacks Consensus
The company's adjusted gross profit margin expanded 40 basis
points (bps) to 58.6%, driven by increased prices and cost
savings from the company's funding-the-growth initiatives.
Moreover, adjusted operating profit climbed 4% to $985 million,
while operating margin expanded 20 bps to 22.8%.
Looking ahead, Colgate-Palmolive anticipates the growth momentum
to continue as it remains on track with its global restructuring
program, funding-the-growth initiatives and strategic worldwide
pricing schemes. In 2013, the company expects strong organic
sales and gross margin expansion, coupled with 5.5% to 6.5%
growth in earnings per share.
However, lingering macroeconomic concerns in Venezuela will
remain a drag on its financials in the coming quarters. In
addition, intense competition and sluggish economic recovery may
undermine the company's growth prospects.
Other Stocks to Consider
Until any further upward revision in Colgate-Palmolive's Zacks
Rank, other stocks in the consumer staples industry that are
worth considering include
Nu Skin Enterprises Inc.
Avon Products Inc.
). Of these, Nu Skin holds a Zacks Rank #1 (Strong Buy) while ZEP
and Avon carry a Zacks Rank #2 (Buy).
AVON PRODS INC (AVP): Free Stock Analysis
COLGATE PALMOLI (CL): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
ZEP INC (ZEP): Free Stock Analysis Report
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