Procter & Gamble Vs. Colgate-Palmolive: Which Toothpaste Titan Posted the Better Quarter?

P&G and Colgate-Palmolive have both recently released their quarterly earnings, so let's find out which performed better.

Jun 11, 2014 at 12:45PM

Procter & Gamble (NYSE:PG) and Colgate-Palmolive (NYSE:CL) are the two undisputed titans of the toothpaste industry, with their Crest and Colgate brands controlling over 60% of the market between just the two. Both companies have recently released earnings for their respective quarters, so let's compare the results to determine which had the better quarter and could provide the highest returns for investors going forward.

Breaking down the quarterly results

Brands Landing Banner Health

Source: Procter & Gamble

On April 23, P&G released its third-quarter report for fiscal 2014 and the results were mixed compared to analysts' expectations; here's a breakdown and year-over-year comparison:

Earnings Per Share $1.04 $1.02
Revenue $20.56 billion $20.73 billion

Source: Benzinga

  • Earnings per share increased 5.1%
  • Revenue decreased 0.2%
  • Global unit volume increased 3%
  • Organic sales increased 3%
  • Gross profit decreased 2.9% to $9.96 billion
  • Gross margin contracted 140 basis points to 48.4%
  • Operating profit increased 1.6% to $3.46 billion
  • Operating margin expanded 30 basis points to 16.8%
  • Repurchased approximately $1.5 billion worth of its common stock
  • Paid approximately $1.7 billion in dividends
  • Other most notable update: On April 7, P&G raised its quarterly dividend by 7% to $0.6436 per share; this marked the 58th consecutive year in which P&G has increased its dividend.
Screen Shot

Source: Colgate-Palmolive

Colgate-Palmolive released its first-quarter report for fiscal 2014 on April 25 and the results satisfied analysts' expectations; here's a breakdown and year-over-year comparison:

Earnings Per Share $0.68 $0.68
Revenue $4.33 billion $4.32 billion

Source: Benzinga

  • Earnings per share increased 3%
  • Revenue increased 0.2%
  • Global unit volume increased 5%
  • Organic sales increased 6.5%
  • Gross profit increased 0.4% to $2.52 billion
  • Gross margin expanded 10 basis points to 58.4%
  • Operating profit increased 1.8% to $1.0 billion
  • Operating margin expanded 30 basis points to 23.1%
  • Repurchased approximately $453 million worth of its common stock
  • Paid approximately $316 million in dividends
  • Other most notable statistic: In the report, Colgate provided its updated global market share information:
CategoryToothpasteManual ToothbrushesMouthwash
Global Market Share


33.1% 17.3%

What will the rest of the year hold?

Screen Shot

Source: Crest's Facebook

Following its third-quarter results, P&G lowered its full-year outlook on fiscal 2014; here's P&G's new outlook versus its previous one:

MetricPrevious OutlookNew Outlook
Reported EPS Growth 7%-9% 1%-4%
Core EPS Growth 5%-7% 3%-5%
Net Sales Growth 1%-2% 1%
Organic Sales Growth 3%-4% 3%-4%

Source: Procter & Gamble

This new outlook fell short of analysts' expectations for the year and P&G cited higher than expected foreign exchange headwinds and slower than expected market growth rates as the primary reasons. With this being said, on its conference call, P&G reiterated that it anticipates 90% free cash flow productivity, which will enable well over $6 billion in share repurchases in fiscal 2014 and allow it to pay its bountiful 3.2% dividend.


Source: Colgate

Following its strong first-quarter results, Colgate-Palmolive stated that it expects "another year of strong organic sales growth and gross margin expansion in 2014, and expect diluted earnings per share for the year to grow 4% to 5% on a dollar basis and at a double-digit rate on a currency neutral basis;" this forecast would result in earnings per share in the range of $2.95-$2.98, in-line with analysts' expectations. Also, it is safe to assume that Colgate will generate ample free cash flow during the year, so it can continue to repurchase a substantial amount of its shares while paying its healthy 2.1% dividend. 


Source: Colgate's Facebook

And the winner is...
After comparing the companies' earnings results and outlooks going forward, the winner of this match-up is Colgate-Palmolive; it showed growth in every key financial category and its outlook on the rest of the fiscal year calls for more of the same. Also, the fact that Colgate commands an absolutely incredible 44.3% of the global toothpaste market sets it apart as the best pure-play investment opportunity in the oral-care industry.

Today, Colgate's stock sits just below its 52-week high, however I believe there is much more room to the upside. Foolish investors would be wise to consider adding Colgate to their long term holdings. As always, Foolish investors should do their own research before making any investment decisions. 

Want more top dividend stocks? Take a look at these...
The smartest investors know that dividend stocks, like P&G and Colgate-Palmolive, simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information