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Colgate (CL), Philips to Offer Electric Oral Care in Latin America

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·3 min read
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Colgate-Palmolive Company CL has partnered with Philips to introduce electric toothbrushes to the people of Latin America. This long-term deal will bring together world’s number one oral care brand and number one manufacturer of sonic toothbrushes under a co-brand, namely Philips Colgate. The move comes after both the companies discovered that the usage of electric toothbrush in Latin America is low.

This product line will come with a variety of electric toothbrushes at different prices. Further, the new brand will be available in limited countries in the said region.

Colgate remains focused on premiumization of the Oral Care portfolio through major innovations. Notably, its innovation in naturals and whitening is driving growth in the Latin America division. In fact, it witnessed double-digit growth in the Latin America business during fourth-quarter 2020.

In North America, the company’s premium innovation initiatives included hum by Colgate, Colgate Optic White Renewal toothpaste and the Colgate Optic White Overnight Teeth Whitening Pen. Also, its efforts toward innovation are highlighted by continuous expansion of Naturals and Therapeutics divisions, as well as the Naturals toothpaste and prescription diet. This, along with accelerated investments in brands and higher pricing, is likely to aid the top line.

As more and more consumers are using online services for their essential needs due to the pandemic, the company has expanded the availability of products through e-commerce offerings. It is witnessing positive trends in the e-commerce platform led by growth in the Hill’s business. The launch of Hill’s to home enables pet parents to purchase prescription diet products directly from their veterinarian via the home delivery option. All these actions are likely to fuel sales.

Driven by such well-chalked out efforts, management predicts 2021 net sales growth of 4-7%, given a favorable currency impact. Organic sales are likely to rise 3-5% year over year. Further, it expects gross margin expansion on both GAAP and adjusted basis. Meanwhile, adjusted earnings per share are projected to grow in mid- to high-single digits.

However, the company is likely to witness an increase in advertising investment in 2021, which, along with higher logistic costs as well as investments related to product innovation and growth may result in elevated costs. Also, rising input costs remain a concern and may weigh on its margins.

In the past year, this Zacks Rank #3 (Hold) stock has gained 23.8% compared with the industry’s growth of 26.6%.

Stocks to Consider

The Estee Lauder Companies EL has a long-term earnings growth rate of 10.7% and a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Constellation Brands STZ currently has an expected long-term earnings growth rate of 7.4% and a Zacks Rank #2 (Buy).

Compania Cervecerias Unidas, S.A. CCU, also a Zacks Rank #2 stock, has an expected long-term earnings growth rate of 10.2%.

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