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Will Colgate (CL) Miss Earnings This Season?

Zacks Equity Research

Colgate-Palmolive Co. (CL) is scheduled to report its first-quarter fiscal 2014 results on Apr 25. Last quarter, this global dealer in consumer goods posted a positive earnings surprise of approximately 1.35%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Colgate’s strong fourth-quarter fiscal 2013 performance was mainly driven by an improved top line and better cost containment. Top-line growth during the quarter resulted from a rise in global unit volumes and improved performance across all operating regions, except Europe/South Pacific, offset by currency translation effects.

Looking ahead, Colgate-Palmolive anticipates its growth momentum to continue into 2014 as it remains on track with its global restructuring program. Further, the company’s stringent focus on funding-the-growth programs and strategic worldwide pricing endeavors should help boost its bottom line. As a result, the company expects strong earnings as well as gross margin expansion in 2014.

Earnings Whispers?

Our proven model does not conclusively project Colgate as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
Zacks ESP: ESP for Colgate is 0.00% since the Most Accurate estimate stands at 68 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Colgate’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.

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