Earnings Preview: Colgate-Palmolive - Analyst Blog
January 23 2012 - 5:30AM
Zacks
Colgate-Palmolive
Company (CL), one of the leading global consumer product
manufacturers, is scheduled to report its fourth-quarter 2011
financial results before the market opens on January 26, 2012. The
current Zacks Consensus Estimate for the quarter is earnings of
$1.30 a share. For the quarter under review, revenue is expected to
be $4,219 million, according to the Zacks Consensus Estimate.
Third-Quarter 2011, a
synopsis
Colgate-Palmolive posted earnings
of $1.31 per share for third-quarter 2011, remaining in line with
the Zacks Consensus Estimate. Earnings surpassed the prior-year
quarter figure of $1.21 per share by 8.2%.
Global net sales increased
11.2% year over year to $4,383 million based on 2% surge in pricing
and 4.5% rise in foreign exchange coupled with a 4.5% addition from
global unit volume. On an organic basis (excluding foreign
exchange, acquisitions and divestitures), sales increased 5% in the
quarter. Global net sales beat the Zacks Consensus Revenue Estimate
of $4,374 million.
Zacks
Consensus
The analyst covered by Zacks
expects Colgate-Palmolive to post fourth-quarter 2011 earnings of
$1.30 a share, higher than $1.24 delivered in the prior-year
quarter. Currently, the Zacks Consensus Estimate ranges between
earnings of $1.24 and $1.35 a share.
For fiscal 2011, the Zacks
Consensus Estimate stood at $5.02 per share, higher than the
previous fiscal earnings of $4.84. The current Zacks estimate
ranges between $4.97 and $5.07 per share.
Agreement of
Estimate
For the fourth quarter of fiscal
2011, of the 21 analysts covering the stock, 4 analysts revised
their estimates downward, while none has revised in the opposite
direction in the last 30 days. For full fiscal 2011, 4 analysts
revised their estimates in negative direction, while 1 revised in
positive direction, in the last 30 days.
In the last 7 days, 2 out of 21
analysts have revised their estimates in the negative direction for
the fourth quarter as well as for fiscal 2011.
Magnitude of Estimate
Revisions
Despite negative estimate revision
by most of the analysts, the Zacks Consensus Estimates remained
stagnant at $1.30 for the fourth quarter, over the last 7 and 30
days. However, for fiscal 2011, the Zacks Consensus Estimate
contracted by a penny to $5.02 per share over the last 7 days.
Surprise
History
With respect to earnings surprises,
Colgate-Palmolive has met as well as topped the Zacks Consensus
Estimate over the last four quarters in the range of 0.0% to 0.8%.
The average remained at positive 0.8%. This suggests that
Colgate-Palmolive has surpassed the Zacks Consensus Estimate by an
average of 0.8% in the trailing four quarters.
Our
View
We believe that,
Colgate-Palmolive’s continued focus on innovation and development
of new products will facilitate it in enhancing its customer base
while increasing market share. Moreover, the company’s strategy of
acquiring businesses with potential for generating higher top-line
growth and margin will boost its future growth.
However, Colgate-Palmolive operates
in an intensely competitive environment. The resurgence of
archrival Procter & Gamble Company (PG) has
signaled new challenges. Global competitive conditions have also
intensified, and Colgate is facing strong competition in China,
Russia, India, Hong Kong, Brazil and Mexico.
Currently,
Colgate-Palmolivemaintains a Zacks #4 Rank, which translates into a
short-term ‘Sell’ recommendation. Our long-term recommendation on
the stock remains ‘Neutral’.
COLGATE PALMOLI (CL): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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