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Factors Likely to Decide Colgate's (CL) Fate in Q1 Earnings

Zacks Equity Research

Colgate-Palmolive Company CL is likely to register an increase in the top line when it reports first-quarter 2020 numbers on May 1, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $4,055 million, indicating growth of 4.4% from the prior-year reported figure.

Further, the bottom line of this global consumer products company is also expected to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has moved up by a penny over the past 30 days to 72 cents. The figure suggests an increase of 7.5% from the prior-year quarter.

Notably, the company’s bottom line has outperformed the Zacks Consensus Estimate in two of the trailing four quarters.

Factors to Note

Colgate’s increased investment in brands, favorable pricing strategy, innovative product launches and enhancement of e-commerce capabilities have been contributing to the company’s top line performance. We note that the company has been expanding the availability of its products through the e-commerce offerings with the launch of Hill’s to home, which enables pet parents to purchase prescription diet products directly from their veterinarian with home delivery option.

Notably, positive pricing across all regions and strong volume have been aiding organic revenues. The company has been also making concerted efforts to expand portfolio of products. The acquisitions of Filorga, a premium skin care brand and Hello Products, a premium oral care brand are worth mentioning. Moreover, the company’s Global Growth and Efficiency Program and the Funding the Growth plan have been helping it reduce costs and improve productivity, which are likely to get reflected in margins in the to-be-reported quarter.

In spite of these tailwinds, concerns related to higher selling, general & administrative, unfavorably currency fluctuations and stiff competition cannot be ignored. Moreover, any escalation in raw and packaging-material expenses may impact margins to an extent.

Colgate-Palmolive Company Price, Consensus and EPS Surprise

Colgate-Palmolive Company Price, Consensus and EPS Surprise

Colgate-Palmolive Company price-consensus-eps-surprise-chart | Colgate-Palmolive Company Quote

What the Zacks Model Unveils

Our proven model predicts 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 chances of an earnings beat. 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 +0.79%.

3 More Stocks With a Favorable Combination

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

Hain Celestial HAIN has an Earnings ESP of +9.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger KR has an Earnings ESP of +8.93% and a Zacks Rank #2.

Dollar General DG has an Earnings ESP of +3.07% and a Zacks Rank #3.

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Colgate-Palmolive Company (CL) : Free Stock Analysis Report
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