Here's How Colgate (CL) Looks Ahead of Q3 Earnings Report

Colgate-Palmolive Company CL is slated to release third-quarter 2020 results on Oct 30, before the opening bell. In the last reported quarter, this global consumer products company delivered an earnings beat of 4.2%. Moreover, the company recorded an earnings surprise of 2.1%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for Colgate’s third-quarter earnings is pegged at 70 cents per share, suggesting a decline of 1.4% from the year-ago quarter. The consensus estimate has remained unchanged in the past 30 days. For third-quarter revenues, the consensus mark is pegged at $3.97 billion, suggesting 1.1% growth from the prior-year reported figure.

Factors to Note

Colgate has been gaining from strong demand for some categories like liquid hand soap, dish liquid, bar soap and cleaners across all geographies that have been contributing to the top line amid the coronavirus pandemic. Also, strong volume growth and robust pricing have been key growth drivers.

ColgatePalmolive Company Price and EPS Surprise


ColgatePalmolive Company Price and EPS Surprise

ColgatePalmolive Company price-eps-surprise | ColgatePalmolive Company Quote

Further, the company has increased its focus on the online platform as more and more consumers are using online services for their essential needs, given the COVID-19 outbreak. This led to growth of more than 50% in the e-commerce business during the second quarter, backed by a solid online show in Hill’s and U.S. businesses. We expect the robust online trend to have continued in the third quarter, which is expected to get reflected in the company’s top-line results.

With the recent boom in the pet business due to increased pet adoptions during the pandemic, the company’s performance in the third quarter is likely to have benefited from efforts to expand the availability of pet products through e-commerce offerings with the launch of Hill’s to home. This service enables pet parents to purchase prescription diet products directly from their veterinarians with home delivery options.

Additionally, the company has been benefiting from innovation and in-store implementation, which have been the guiding principles of its growth strategy. Also, the company has been focused on expanding the availability of its products through enhanced distribution to newer markets and channels, which is likely to have helped improve its organic sales performance.

In spite of these tailwinds, concerns related to higher selling, general and administrative expenses, unfavorable currency fluctuations, and stiff competition cannot be ignored. Moreover, any escalation in raw and packaging-material expenses is expected to have impacted margins to an extent.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Colgate this time around. 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’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Colgate has a Zacks Rank #3 and an Earnings ESP of -0.82%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Nu Skin Enterprises, Inc. NUS presently has an Earnings ESP of +3.54% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands, Inc. NWL has an Earnings ESP of +0.33% and a Zacks Rank #2 at present.

Church Dwight Co., Inc. CHD currently has an Earnings ESP of +1.80% and a Zacks Rank #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.

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