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Things You Need to Know Before Colgate's (CL) Q3 Earnings

Zacks Equity Research

Colgate-Palmolive Company CL is scheduled to report third-quarter 2019 numbers on Nov 1, before the opening bell.

The company’s earnings missed estimates in the last reported quarter after two consecutive quarters of beat. Consequently, it delivered average earnings beat of 0.4% in the trailing four quarters. Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Estimate Picture

The Zacks Consensus Estimate for third-quarter earnings has moved down by a penny in the past 30 days to 70 cents, which suggests a decline of 2.8% from the year-ago quarter’s reported figure.

Colgate-Palmolive Company Price and EPS Surprise

 

Colgate-Palmolive Company Price and EPS Surprise

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

For revenues, the consensus estimate stands at $3.96 billion that suggests growth of approximately 2.9% from the year-ago quarter’s reported number.

Factors to Consider

Colgate has been grappling with soft margins and foreign currency fluctuations, a trend that is likely to have continued in the third quarter as well. We note that any increase in raw and packaging material costs as well as deleverage in SG&A expenses are expected to get reflected in margins and in turn the bottom line. In its last earnings call, management had projected continued impacts of higher raw material costs, including foreign exchange transaction costs, on margins in the second half of 2019.

Nonetheless, the company’s positive pricing across all regions and strong volume have been aiding organic revenues. Notably, its pricing actions and productivity programs are likely to have cushioned margins. Moreover, the company’s Global Growth and Efficiency Program (or 2012 Restructuring Program) and the Funding the Growth plan have been helping it to reduce costs, which are likely to get reflected on its margins.

Furthermore, significant gains from accelerated investments in brands, innovation, and expansion in new markets and e-commerce are likely to have aided its performance in the third quarter.

What Does Zacks Model Say

Our proven model doesn’t 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.

Currently, Colgate carries a Zacks Rank #4 (Sell) and Earnings ESP of -0.61%.

Stocks With Favorable Combination

e.l.f. Beauty Inc ELF has an Earnings ESP of +10.71%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight Co., Inc CHD has an Earnings ESP of +0.22% and a Zacks Rank #2 at present.

Molson Coors Brewing Company TAP currently has an Earnings ESP of +4.56% and a Zacks Rank #3.

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