Will Colgate-Palmolive Beat Earnings Estimates This Season?


We expect the global dealer in consumer goods Colgate-Palmolive Co. (CL) to beat expectations when it reports second-quarter 2014 results on Jul 31.

Why a Likely Positive Surprise?

Our proven model shows that Colgate may beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Colgate currently has an Earnings ESP of +1.37%. This is because the Most Accurate estimate stands at 74 cents per share, while the Zacks Consensus Estimate is pegged at 73 cents.

Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Colgate's Zacks Rank #2 and Earnings ESP of +1.37% makes us confident of a positive earnings beat.

What's Driving Better-than-Expected Earnings?

Colgate-Palmolive commands a market-leading position in oral care and personal care product categories. We believe that the company’s continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies facilitate it to utilize growth opportunities and consequently boosts its profitability.

Further, the company in order to augment its unit volume growth and organic sales, and strengthen its global leadership position, is working toward its four-year Global Growth and Efficiency Program or 2012 Restructuring Program, which is expected to generate cost savings of approximately $365-$435 million annually from the fourth year and reduce its workforce by 8%.

Moreover, following the strong first-quarter 2014 results the company seems confident about rest of 2014 as it remains on track with its global restructuring program. Further, the company’s increased focus on funding-the-growth programs and strategic worldwide pricing endeavors should help boost its bottom line.

Colgate has posted in-line results in three of the trailing four quarters while it has topped the Zacks Consensus Estimate in one of the quarters. As a result, the company’s average positive surprise stands at 1.35%. In the last concluded quarter, the company met the Zacks Consensus Estimate of 68 cents.

Other Stocks to Consider

Colgate is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Avis Budget Group Inc. (CAR) has an Earnings ESP of +3.18% and a Zacks Rank #2.

Archer Daniels Midland Co. (ADM) has an Earnings ESP of +5.26% and a Zacks Rank #2.

Newell Rubbermaid Inc. (NWL) has an Earnings ESP of +1.85% and a Zacks Rank #2.

Read the Full Research Report on CL
Read the Full Research Report on NWL
Read the Full Research Report on ADM
Read the Full Research Report on CAR

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