Earnings Preview: Colgate-Palmolive - Analyst Blog
April 25 2011 - 6:00AM
Zacks
Colgate-Palmolive Co. (CL) is scheduled to
release its first-quarter 2011 results on Thursday, April 28, 2011.
The Zacks Consensus Estimate for the quarter is pegged at 28 cents
a share, representing a year-over-year fall of 54.7%.
Fourth Quarter & Fiascal 2010
Performance
Colgate-Palmolive Company posted fourth-quarter earnings of
$1.24 per share, marginally outpacing the Zacks Consensus Estimate
of $1.23 and prior-year quarter earnings of $1.21 per share.
For fiscal 2010, the company reported earnings per share of
$4.31. It lagged behind the Zacks Consensus Estimate of $4.81 due
to a one-time, non-cash, after-tax charge of $271.0 million
resulting from a required accounting change.
Global net sales fell 2.5% year over year to $3,978 million as
pricing remained flat while unit volume rose 1%, offset by a
negative foreign exchange impact of 3.5%. On an organic basis,
(excluding foreign exchange, acquisitions and divestitures), sales
increased 1.0% in the quarter. Global net sales also fell short of
the Zacks Consensus Revenue Estimate of $4,058 million.
Agreement of Analysts
Over the past 30 days, 3 of the 22 analysts covering Colgate for
the first quarter of 2011 have revised their earnings estimates
upward with one stray movement in the opposite direction. In the
last 7 days, 1 analyst has decreased the estimate with no movement
in the positive direction.
There is however a more upward bias for fiscal 2011. Five of the
25 analysts following the stock for 2011 have revised their
estimates upward over the last 30 days with 1 analyst moving in the
opposite direction.
Magnitude of Estimate Revisions
With no effect from earnings revisions by the analysts in the
last 7 days and 30 days, the Zacks Consensus Estimates for the
first quarter of fiscal 2011 remained unchanged at $1.16 per share.
For fiscal 2011, the Consensus estimate has moved up by 1 cent to
$5.06 in the last 30 days.
Surprise History
With respect to earnings surprises, Colgate showed a favorable
trend in the last four quarters. The company has recorded positive
surprises in the trailing four quarters with a low of 0.81% and a
high of 4.31%. On an average, the earnings surprise was a positive
1.92%. Based on the current flow, we expect the company to come up
with healthy results in the upcoming quarter.
Our Recommendation
Colgate-Palmolive is the industry leader in oral care and
commands market-leading positions in many personal care product
categories. Furthermore, a strong portfolio of globally recognized
brands, including Colgate, Palmolive, Mennen, Softsoap, Irish
Spring, Protex, Sorriso, Kolynos, Elmex, Ajax and Axion, provides a
competitive advantage to the company and strengthens its dominant
position in the market.
Moreover, in an effort to further drive growth, Colgate
seeks to capture significant opportunities by identifying and
targeting consumer needs within its core categories. The company
further focuses on innovation and the deployment of valuable
consumer and shopper insights for developing successful new
products regionally, which are rolled out on a global basis.
Colgate-Palmolive, which competes with names like
Procter & Gamble Company (PG) and
Church & Dwight Company Inc. (CHD), maintains
a Zacks #3 Rank, translating into a short-term "Hold"
recommendation. Our long-term recommendation on the stock remains
"Neutral".
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
COLGATE PALMOLI (CL): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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