It's been a good week for Colgate-Palmolive Company (NYSE:CL) shareholders, because the company has just released its latest annual results, and the shares gained 5.0% to US$73.78. Results were roughly in line with estimates, with revenues of US$16b and statutory earnings per share of US$2.75. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Colgate-Palmolive's 13 analysts is for revenues of US$16.4b in 2020, which would reflect a satisfactory 4.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to rise 6.3% to US$2.93. Before this earnings report, analysts had been forecasting revenues of US$16.2b and earnings per share (EPS) of US$2.94 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$75.55, suggesting that the company has met expectations in its recent result. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Colgate-Palmolive, with the most bullish analyst valuing it at US$82.00 and the most bearish at US$58.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
In addition, we can look to Colgate-Palmolive's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing stands out from these estimates, which is that analysts are forecasting Colgate-Palmolive to grow faster in the future than it has in the past, with revenues expected to grow 4.3%. If achieved, this would be a much better result than the 1.6% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 3.6% next year. So it looks like Colgate-Palmolive is expected to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Colgate-Palmolive analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Colgate-Palmolive's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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