Colgate-Palmolive Company CL is expected to register top and bottom-line growth when it reports its third-quarter 2024 numbers on Oct. 25, before the opening bell. The Zacks Consensus Estimate for third-quarter revenues is pegged at $5.01 billion, indicating a rise of 1.9% from the year-ago quarter’s reported figure.
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The consensus estimate for the company’s earnings is pegged at 88 cents per share, suggesting growth of 2.3% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings for the quarter has been unchanged in the past 30 days.
In the last reported quarter, the company's earnings beat the consensus estimate by 4.6%. It has delivered an earnings surprise of 4.8%, on average, in the trailing four quarters.
Key Aspects to Note
Colgate’s third-quarter 2024 performance is expected to have benefited from a solid business momentum, supported by pricing, funding-the-growth and other productivity initiatives. The company’s idea of delivering balanced organic sales growth, driven by improvements in all categories and divisions, and volume and pricing gains, has been driving its performance. CL’s brand strength, coupled with its focus on innovation, premiumization and digital transformation, is expected to have driven its performance in the to-be-reported quarter.
Our model predicts organic sales growth of 6.5% for third-quarter 2024, with an improvement of 1% in North America, 14% in Latin America, 4% in Europe, 3% in the Asia Pacific, 15% in Africa/Eurasia and 5% in Pet Nutrition. We expect volume growth of 3.4% and pricing gains of 3.1% for the third quarter.
Additionally, the company has been delivering a sequential rise in the gross margin for the past few quarters, driven by continued strong pricing, benefits from revenue growth management initiatives, strength in the funding-the-growth program, and other productivity initiatives. Continued gains from these initiatives are expected to have led to a gross margin expansion in the to-be-reported quarter.
We expect the adjusted gross margin to expand 240 basis points (bps) to 61% in the third quarter, with a 5.9% year-over-year rise in adjusted gross profit on a dollar basis.
The leading global consumer products company has been aggressively expanding its faster-growth channels while extending the geographic footprint of its brands. The company’s efforts to improve product availability through enhanced distribution across existing and new markets are likely to have driven its performance in the quarter under review.
Colgate-Palmolive Company Price and EPS Surprise
Colgate-Palmolive Company price-eps-surprise | Colgate-Palmolive Company Quote
However, Colgate has been witnessing headwinds related to continued volume softness in China and the expected headwind from lower private label growth as it transferred more of Hill’s volume into the pet nutrition manufacturing network. The effects of these headwinds are anticipated to slightly mar the company’s top-line performance in the to-be-reported quarter.
Also, higher raw material costs and the inflationary foreign exchange headwinds have been partly offsetting growth in the gross margin. On the last reported quarter’searnings call management stated that although it expects the sequential margin improvement trend to continue, growth is likely to be slightly offset by headwinds related to transactional foreign exchange and higher raw material costs.
The company has been committed to investing in capabilities like digital, data and analytics, leading to higher SG&A expenses. We expect this trend to have continued into the third quarter of 2024.
We anticipate SG&A expenses to increase 6.1% year over year in the third quarter. As a percentage of sales, SG&A expenses are expected to rise 160 bps year over year to 38.7% in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Colgate this season. 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. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Colgate currently has an Earnings ESP of +0.96% and a Zacks Rank of 3.
Price Performance & Valuation
Colgate’s shares have exhibited an uptrend, rising as much as 39.6% in the past year. The stock has surpassed the broader industry and the Consumer Staples sector’s growth of 21.8% and 15.7%, respectively. Also, the CL stock has outperformed the S&P 500 index, which grew 38.5% in the same period.
CL's One-Year Stock Price Performance
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From the valuation standpoint, CL trades at a forward 12-month P/E multiple of 26.29X, exceeding the industry average of 23.16X and the S&P 500’s average of 22.28X. Colgate’s valuation appears quite pricey.
Other Stocks With Favorable Combination
Here are some other companies that, according to our model, also have the right combination of elements to beat on earnings this reporting cycle.
Clorox CLX has an Earnings ESP of +2.41% and a Zacks Rank of 2 at present. CLX is likely to register top and bottom-line growth when it releases third-quarter 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.6 billion, which suggests growth of 17.2% from the figure reported in the year-ago quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Clorox’s quarterly earnings has moved up by a penny in the past 30 days to $1.36 per share, suggesting growth of 177.6% from the year-ago quarter’s reported number. CLX has delivered an earnings surprise of 122.9%, on average, in the trailing four quarters.
Monster Beverage MNST currently has an Earnings ESP of +0.13% and a Zacks Rank of 3. MNST is anticipated to register top and bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for MNST’s quarterly revenues is pegged at $1.9 billion, indicating growth of 3.2% from the figure reported in the year-ago quarter.
The consensus estimate for Monster Beverage’s earnings has moved down by a penny of cents in the past seven days to 42 cents per share. The consensus estimate suggests 2.4% growth from the year-ago quarter’s reported figure. MNST has delivered a negative earnings surprise of 3.4%, on average, in the trailing four quarters.
Mondelez International MDLZ has an Earnings ESP of +0.95% and a Zacks Rank of 3 at present. MDLZ is likely to register top and bottom-line growth when it releases second-quarter 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $9.1 billion, implying a rise of 0.5% from that reported in the year-ago quarter.
The consensus estimate for Mondelez’s quarterly earnings has been unchanged in the past 30 days at 85 cents per share, indicating growth of 2.4% from the year-ago quarter’s reported number. MDLZ has a trailing four-quarter average earnings surprise of 7.8%.
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