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Factors to Decide the Fate of Colgate (CL) in Q2 Earnings

·6 min read

Colgate-Palmolive Company CL is expected to register top-line growth when it reports second-quarter 2022 numbers on Jul 29, before the opening bell. The company is expected to deliver sales growth in the to-be-reported quarter.

The Zacks Consensus Estimate for revenues is pegged at $4.37 billion, which indicates a rise of 2.5% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s earnings is pegged at 71 cents per share, suggesting a decline of 11.3% from the prior-year quarter’s figure. The consensus mark for earnings has been unchanged in the past 30 days.

In the last reported quarter, the company reported earnings in line with the Zacks Consensus Estimate. It has delivered an earnings surprise of 0.6%, on average, in the trailing four quarters.

ColgatePalmolive Company Price and EPS Surprise

 

ColgatePalmolive Company Price and EPS Surprise
ColgatePalmolive Company Price and EPS Surprise

ColgatePalmolive Company price-eps-surprise | ColgatePalmolive Company Quote

Key Aspects to Note

The leading global consumer products company is expected to have gained from consumer demand for personal care, hygiene and home care products. Colgate has been driving growth via product innovation, in-store implementation and expansion plans. Increased focus on premiumization and digital transformation also bodes well. These are likely to have aided the second-quarter 2022 performance.

Colgate’s top-line performance is expected to have benefited from increased product pricing across all regions to combat rising costs.

The company has been focused on the premiumization of its Oral Care portfolio through major innovations. Its premium innovation products, including CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste, have been performing well. This is expected to have boosted organic sales growth for its oral care business in the second quarter.

Colgate’s Hill's business has been witnessing momentum, which is expected to have delivered sales growth in the second quarter. Strength in Hill's Prescription Diet and Hill's Science Diet has been aiding sales for the segment. The company’s newly launched Prescription Diet Derm Complete has been gaining market share. This is expected to have boosted sales in the second quarter.

Expanding product availability through enhanced distribution to newer markets and channels is one of Colgate’s priorities to improve organic sales. The company has been aggressively expanding into faster growth channels, while extending the geographic footprint of its brands. Colgate has also been focused on expanding the availability of its products through the e-commerce channel, as more consumers have been using online services for their essential needs. Gains from the company’s expansion efforts are likely to get reflected in the to-be-reported quarter’s results.

However, higher raw material and logistic costs worldwide despite sales growth have been concerning. Each of the company’s segments has been incurring significantly higher raw and packaging material costs. Higher logistics costs have been resulting from volume and capacity constraints in the shipping and logistics industry, higher e-commerce demand, and the impact of the Ukraine war. These headwinds are likely to have continued to impact the second-quarter performance.

Moreover, the company has been witnessing a deleverage in advertising and SG&A expenses, which have been weighing on margins. These costs and headwinds are likely to have hurt the bottom-line results in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Colgate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Colgate has a Zacks Rank #3 and an Earnings ESP of -0.33%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Corteva CTVA has an Earnings ESP of +0.20% and currently sports a Zacks Rank #1. The company is expected to register top and bottom-line growth when it reports the second-quarter 2022 numbers. The Zacks Consensus Estimate for CTVA’s quarterly revenues is pegged at $6.18 billion, which suggests growth of 9.8% from the prior-year quarter’s reported figure.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Corteva’s quarterly earnings has moved up by a penny in the past seven days to $1.47 per share, suggesting 5% growth from the year-ago reported number. CTVA has delivered an earnings beat of 23.3%, on average, in the trailing four quarters.

Hershey HSY has an Earnings ESP of +1.54% and flaunts a Zacks Rank #1 at present. HSY is likely to register top and bottom-line growth when it reports the second-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.22 billion, which suggests growth of 11.7% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Hershey’s quarterly earnings has been unchanged in the past 30 days at $1.66 per share, suggesting growth of 12.9% from the year-ago quarter’s reported number. HSY has delivered an earnings beat of 7.9%, on average, in the trailing four quarters.

Kellogg's K currently has an Earnings ESP of +2.01% and a Zacks Rank #3. K is anticipated to register top-line growth when it reports the second-quarter fiscal 2022 results. The Zacks Consensus Estimate for Kellogg's quarterly revenues is pegged at $3.64 billion, indicating an improvement of 2.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Kellogg's bottom line has been unchanged in the past 30 days at $1.05 per share. However, the consensus estimate suggests a decline of 7.9% from the prior-year quarter. K has delivered an earnings beat of 12.8%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Hershey Company The (HSY) : Free Stock Analysis Report
 
ColgatePalmolive Company (CL) : Free Stock Analysis Report
 
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Corteva, Inc. (CTVA) : Free Stock Analysis Report
 
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