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Colgate (CL) Grapples with Multiple Headwinds: Time to Dump

You must give a second thought if you are still holding Colgate-Palmolive CompanyCL , as the stock has been losing sheen due to several headwinds. This Zacks Rank #5 (Strong Sell) company's top line has missed the Zacks Consensus Estimate in 12 of the 14 back-to-back quarters. Further, this consumer products bellwether remains vulnerable to global economic challenges, which weigh upon its financial performance.

A look at Colgate's share price reveals that it has underperformed the Zacks categorized Soap & Cleaning Preparations industry as well as the broader Consumer Staples sector in the past six months. The stock declined nearly 11%, compared with the industry's drop of 4%. The broader sector fell approximately 5% over the same time frame.

We note that estimates have moved south in the past 30 days. Over the said time period, the Zacks Consensus Estimate declined 4.9% to $2.91 for 2017 and 6.3% to $3.15 for 2018. This came on the back of soft sales reported in fourth-quarter 2016 and a bleak outlook.

Colgate posted in-line earnings of 75 cents per share for the fourth quarter. The company's revenues 3,721 million missed the Zacks Consensus Estimate of $3,844 million and also declined 4.5% year over year, including a 1.5% impact from currency headwinds. Further, its segments' revenues fell year over year, except North America and Hill's Pet Nutrition segments.

Moving ahead, Colgate anticipates the backdrop to remain challenging due to the uncertain global markets and lingering currency headwinds. This is expected to hurt both the top- and bottom-line results in 2017. Hence, it expects net sales for 2017 to improve in low-single digits range. However, the company anticipates organic sales growth to remain solid backed by its full new product pipeline, appealing marketing programs and strong advertising support.

Excluding charges related to the 2012 Restructuring Program and the other 2016 one-time items, Colgate envisions 2017 earnings per share on a dollar-basis to be about low-single-digits. (Read more: Colgate Q4 Earnings In Line, Revenues Lag; Stock Down )

Colgate-Palmolive Company Price and Consensus

Colgate-Palmolive Company Price and Consensus | Colgate-Palmolive Company Quote

Key Picks

A better-ranked stock in the same industry includes Unilever PLC UL . Other stocks worth considering in the broader Consumer Staples sector include Calavo Growers, Inc. CVGW and Blue Buffalo Pet Products, Inc. BUFF .

Calavo Growers, with a long-term earnings growth rate of 7%, has increased 19.5% in the past one year. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Blue Buffalo Pet Products, with a long-term earnings growth rate of 14%, has a Zacks Rank #2 (Buy). Further, the stock surged 53.9% over the past one year.

Unilever, a Zacks Rank #2 stock, has a long-term earnings growth rate of 6.3%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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