You'd be hard pressed to find evidence of a worldwide recession in Colgate-Palmolive's
|
Colgate-Palmolive Results -- fiscal 2009 |
3rd Quarter |
9 Months |
|---|---|---|
|
Worldwide Sales |
13.0% |
14.9% |
|
Case Volume |
3.0% |
4.5% |
|
Gross Profit |
11.2% |
14.0% |
|
SG&A Expense |
10.2% |
13.6% |
|
Operating Profit |
10.9% |
13.0% |
|
EPS |
15.1% |
16.2% |
All results excluding unusual items in both periods.
It's extraordinary that the company has been able to maintain (virtually) the same momentum it had earlier in the year. Case volume may be slowing a tad, but it's sure nowhere near the case volume declines we've seen recently from Kraft Foods
Gross margin slipped a bit this quarter, as price increases did not fully cover input cost increases. But the company covered this with tighter expense control, and it was encouraging to hear on the earnings call that recent oil price declines will translate into margin rate gains next year, a case I've been making for all the consumer products giants.
Colgate has been near the top of my list of favorite consumer products companies for more than a year now. The company's performance this quarter just reinforces this view, along with management's reiterating that double-digit earnings growth is in the cards for 2009.
At a P/E ratio of 18.8 times trailing-12-month earnings, it's hard to describe Colgate as a screaming value. On the other hand, the stock is more than 20% off its September highs. You might consider putting this one on your list of stocks to buy on dips. I expect that with current market volatility, there will be plenty of opportunities in the next few months to stock up on best-in-class consumer-products companies like Colgate, Procter & Gamble
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