Colgate-Palmolive: Should We Buy This Global Titan Going Into First-Quarter Earnings?

Colgate is about to release its first earnings report of fiscal 2014, so let's see if we should be buyers right now.

Apr 20, 2014 at 10:00AM

Colgate-Palmolive (NYSE:CL), the undisputed king of oral hygiene and the company behind brands such as Colgate, Speed Stick, Irish Spring, Softsoap, Palmolive, and Hill's Pet Nutrition, has scheduled its quarterly results for release in just a couple of days. Let's take a look at its last set of quarterly results, analysts' expectations for the upcoming report, and preview one of its top competitors, Procter & Gamble (NYSE:PG), to decide if we should buy or avoid Colgate right now.

Screen Shot

Source: Colgate-Palmolive

The last quarterly report
Colgate released its fourth-quarter report for fiscal 2013 on Jan. 31 and the results came in mixed in comparison with expectations; here's a breakdown and a year-over-year comparison:

Earnings Per Share $0.75 $0.74
Revenue $4.36 billion $4.40 billion

Source: Benzinga



Colgate's earnings per share increased 7.1% and revenue increased 1.8%, as global unit volume grew a strong 6.5%. Organic sales increased 6.5% led by the emerging markets where organic sales rose 10.5%, which shows that the company's innovation and advertising is paying off. Also, gross profit rose 2.5% to $2.57 billion and the gross margin showed strength, expanding 50 basis points to an impressive 59.1%. Although all of these statistics look great, the highlight of the quarter came with Colgate's updated global market share data:

CategoryToothpasteManual ToothbrushesMouthwash
Market Share 44.9% 32.8% 17%

Source: Colgate-Palmolive

It's hard to comprehend that one company can have a 44.9% market share in any industry, but it just goes to show the superiority of Colgate's offerings in comparison with those of the competition. In summary, Colgate had an all-around great quarter regardless of what analysts expected, but its stock reacted by falling 0.42% in the trading session that followed; however, it quickly rebounded and now sits over 5% higher. 

Expectations & what to watch for
Colgate plans to release its first-quarter results before the market opens on April 25 and the current estimates call for growth on both the top and bottom lines; here's an overview:

MetricExpectedYear Ago
Earnings Per Share $0.68 $0.66
Revenue $4.35 billion $4.32 billion

Source: Estimize

Screen Shot

Source: Colgate-Palmolive

These expectations call for Colgate's earnings per share to increase 3% and revenue to increase 0.7% year-over-year. Key metrics aside, here are three important factors and updates to watch for in the report:

  • First, it will be crucial for Colgate to provide guidance for the second quarter that is within analysts' expectations. The current consensus estimates project earnings per share of $0.74 on revenue of $4.44 billion, which would represent growth of 5.7% and 2%, respectively, from the second quarter of fiscal 2013.
  • Secondly, when it provides second-quarter guidance it will be important for Colgate to reiterate that it expects fiscal 2014 results to be "in line with the external analyst estimates;" currently, consensus analyst estimates call for earnings per share of $3.00 on revenue of $17.79 billion, which would result in growths of 5.6% and 2.1% from fiscal 2013.
  • Lastly, watch for Colgate to give market share updates on toothpaste, manual toothbrushes, and mouthwash. The company will likely maintain its shares in toothpaste and manual toothbrushes, but watch for expansion of its mouthwash share; in the fourth quarter, Colgate expanded its market share in this category by 130 basis points to a record 17% and I believe this could grow to over 18% by the conclusion of fiscal 2014.
If Colgate can meet or exceed the earnings estimates and satisfy these three factors, and I believe that it will, the stock will likely appreciate and set a new 52-week high; it is for these reasons that I believe Foolish investors should initiate positions on any weakness in the coming days.

A competitor's report to watch for
Procter & Gamble, the company behind several brands that compete with those of Colgate-Palmolive, has scheduled its quarterly results for release on April 23. This will be an important report to watch for, as it will be a great gauge for the condition of the industry. Here's a summary of what analysts currently expect the report will hold:

MetricExpectedYear Ago
Earnings Per Share $1.02 $0.99
Revenue $20.68 billion $20.60 billion

Source: Estimize

Screen Shot

Source: Crest's Facebook

These estimates call for P&G's earnings per share to increase 3% and revenue to increase 0.4% year-over-year. The health care, beauty, and home care segments will be the ones to watch in the report, as they contain brands such as Crest, Oral-B, Old Spice, and Iams which directly compete with Colgate's brands.

By analyzing how these competing brands performed, we will have a strong feel for the condition of the consumer and the industry as a whole; as a result, this will either further support or oppose the idea of investing in Colgate, so use the information provided to your advantage.

The Foolish bottom line
Colgate is one of the most dominant companies in any industry and this shows in its immense 44.9% share of the global toothpaste market. The company has scheduled its quarterly results for release in a few days and I believe the estimates are well within reach. Foolish investors should strongly consider initiating positions in Colgate's stock going into the report and holding onto them for several years, as the stock has the potential to appreciate significantly from today's levels while paying a healthy 2.2% dividend.

The 9-minute dividend strategy you need to know
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it’s true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top income analyst put together a report outlining a simple 9-minutes-a-year dividend strategy that should be in every income investor’s toolkit. To learn more about this "tax-skipping" dividend trick, all you have to do is click here now.

Joseph Solitro has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers