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Colgate-Palmolive Hits 52-Week High

Zacks Equity Research

The shares of Colgate-Palmolive Co. (CL) reached a new 52-week high of $66.05 on Nov 6, 2013, gaining momentum from the company’s recently reported strong top and bottom-line results for third-quarter 2013 and an impressive full-year outlook.

This seller of consumer products worldwide eventually closed at $66.01 yesterday, amassing a year-to-date return of roughly 27.0%. Average volume of shares traded over the last 3 months stands at approximately 3,020 K.

The company currently trades at a forward P/E of 23.3x, a 14.8% premium to the peer group average of 20.3x. The last traded price is 1.8% above the Zacks Consensus average analyst price target of $64.86.

Investors are optimistic about this Zacks Rank #3 (Hold) stock as its earnings per share of 73 cents came in line with the Zacks Consensus Estimate and rose 6.0% year over year. Colgate reported net sales of $4398 million that rose 1.5% from the prior-year quarter due to organic sales rise of 6% aided by high-growth emerging markets.

In the reported quarter, adjusted gross profit margin increased 40 basis points to 59.0%. The rise was due to effective cost-cutting measures and increased product price, which offset the high raw material costs and related expenses. However, adjusted operating margin remain almost flat year over year at 23.9%.

With respect to its net income, earnings per share and operating profit, Colgate has outperformed for over 24 consecutive quarters on a year-over-year basis.

Looking ahead, Colgate-Palmolive expects to continue its growth momentum for fiscal 2013, on the back of its pricing strategies, funding-the-growth initiatives and the 2012 restructuring program. It still expects gross margin expansion and 4.5%–5.5% growth in earnings per share for fiscal 2013 and double-digit growth in fiscal 2014 earnings.

Colgate is also known for its shareholder friendly moves. The company has been regularly increasing its dividend every year since 2001 and is paying an annual cash dividend of $1.36 at present. This currently yields a solid 2.1%, while the company has a payout ratio of 52%.

Apart from Colgate, other retail stocks such as Constellation Brands Inc. (STZ), Gannett Co., Inc. (GCI) and GameStop Corp. (GME) achieved new 52-week highs of $66.61, $28.27 and $57.21, respectively, on Nov 6, 2013.

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