On Jul 26, 2013, Fitch Ratings affirmed its long-term and
short-term Issuer default ratings (IDRs) of
) at 'AA-'and 'F1+' respectively, together with the outlook on
the company at 'Stable'.
Apart from IDRs, Fitch confirmed its ratings on
Colgate-Palmolive's senior unsecured notes at 'AA-'; commercial
paper (CP) program at 'F1+' and $1.85 billion revolving credit
facility at 'AA-'.
Fitch's rating was based on Colgate-Palmolive's strong revenues
in the trailing 12 months, a robust operating performance,
substantial liquidity and the company's leading presence in some
of the world's largest markets.
Colgate-Palmolive generated revenues worth nearly $17 billion in
the last 12 months ended Jun 30, 2013. Further, the company's
EBITDA margins were around 26%, at par with other major consumer
care manufacturers. Fitch expects that the adjusted margins will
increase once the company implements its Global Growth and
Efficiency Program through 2016.
Colgate-Palmolive has ample liquidity as the company generated
more than $1 billion in annual free cash flow since 2009. The
rating agency anticipates future cash flow to remain around the
$1 billion mark, even though the company is required to shell out
about $200 million for restructuring charges and capital
Further, Fitch affirmed the stable outlook based on the company's
cash generation, profitability levels, and the credit protection
measures, which is expected to continue in the near future.
Fitch's reaffirmation comes a day after Colgate-Palmolive
reported its 2Q13 results. We believe that the company's industry
leading position and focus on emerging markets will help augment
sales and margins. The company's second-quarter 2013 adjusted
earnings of 70 cents a share came in line with the Zacks
Consensus Estimate and rose 4.0% from the year-ago quarter's
Looking ahead, Colgate-Palmolive anticipates its growth momentum
to continue into 2013 as it remains on track with its global
restructuring program. Further, the company's stringent focus on
the funding-the-growth programs and strategic worldwide pricing
endeavors should help boost its bottom line.
The company expects strong organic sales as well as gross margin
expansion in 2013. The company projects 4.5% to 5.5% growth in
earnings per share for 2013.
Other Stocks to Consider
Colgate-Palmolive currently carries a Zacks Rank #3 (Hold). Other
stocks in the same industry that are worth considering include
Nu Skin Enterprises Inc.
Church & Dwight Co. Inc.
Reckitt Benckiser Group plc
). While Nu Skin carries a Zacks Rank #1 (Strong Buy), Church
& Dwight and Reckitt Benckiser have a Zacks Rank #2
CHURCH & DWIGHT (CHD): Free Stock Analysis
COLGATE PALMOLI (CL): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
RECKITT BENCKSR (RBGLY): Get Free Report
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