CL Colgate Palmolive Co

Colgate-Palmolive Co.(CL) is scheduled to release its second-quarter 2011 results on Thursday, July 28, 2011. The Zacks Consensus Estimate for the quarter is pegged at $1.26 a share, representing a year-over-year estimated growth of 8.6%.

1Q11 Performance Recap

Colgate-Palmolive Company posted first quarter of fiscal 2011 earnings of $1.16 per share, at par with the Zacks Consensus Estimate. However, earnings fell short of the prior-year figure of $1.21 per share.

Global net sales increased 4.5% year over year to $3,994 million primarily due to a 3% benefit from foreign exchange and a 2% addition from global unit volume, which was offset by a 0.5% fall in pricing. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 1.5% in the quarter. Global net sales beat the Zacks Consensus Revenue Estimate of $3,956 million.

Agreement of Analysts

Over the past 30 days, 4 of the 20 analysts covering Colgate for the second quarter of fiscal 2011 have revised their earnings estimates upward with one stray movement in the opposite direction. In the last 7 days, 2 analysts have increased their estimates with no movement in the negative direction.

For fiscal 2011, 4 of the 23 analysts following the stock have revised their estimates upward over the last 30 days with 1 analyst moving in the opposite direction. In the last 7 days, 2 analysts have increased their estimates with no movement in the negative direction.

Magnitude of Estimate Revisions

With little impact from earnings revisions by the analysts in the last 7 and 30 days, the Zacks Consensus Estimate for the second quarter of fiscal 2011 remained unchanged at $1.26 per share. For fiscal 2011, the Consensus Estimate has inched up by 1 cent to $5.08 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 surprises with a low of 0.0% and a high of 1.7%. On an average, the earnings surprise was a positive 1.1%. 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 then 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 #2 Rank, translating into a short-term "Buy" recommendation. Our long-term recommendation on the stock remains "Neutral".

 
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