Colgate-Palmolive (NYSE:CL), the world's leading provider of oral care products and the company behind numerous consumer brands, has watched its stock rise steadily throughout 2014 and strong earnings have enabled this run. The company has just announced that it will release its second-quarter earnings on July 31 and investors are hoping that the results will spark another move higher. Let's take a look at Colgate's most recent quarterly release and the expectations for the upcoming report to determine whether the company is gearing up to beat analysts' expectations and also if it represents a long-term investment opportunity today. 

Source: Colgate-Palmolive

Making investors smile with each report
Colgate last reported earnings on April 25, when it released first-quarter results that satisfied the expectations of analysts; here's a summary:

MetricReportedExpectedYear Ago
Earnings Per Share $0.68 $0.68 $0.66
Revenue $4.33 billion $4.32 billion $4.32 billion

Source: Estimize

Earnings per share increased 3% and revenue increased 0.2% year-over-year, driven by global volume increasing a very strong 5%. Colgate achieved organic sales growth across all of its divisions and reported 6.5% growth in total, led by the emerging markets where organic sales rose an incredible 10%. Much of the growth experienced by Colgate results from its global market share in the oral care industry, in regard to which the company noted that it currently holds a 44.3% share of the toothpaste market, a 33.1% share of the manual toothbrush market, and a 17.3% share of the mouthwash market.

Source: Colgate's Facebook

Colgate's gross profit increased 0.4% to $2.52 billion and its gross margin showed fight, expanding 10 basis points to 58.4%. This expansion of the company's gross margin resulted from higher pricing and cost saving initiatives, but the majority of this was offset by increased costs of raw materials.

Also, Colgate reported $820 million in net cash provided by operations and $168 million in capital expenditures, which resulted in free cash flow of $652 million. The company used this free cash flow and the $962 million in cash and cash equivalents it had to begin the quarter to repurchase approximately $453 million worth of its common stock and pay out approximately $316 million in dividends. Colgate ended the quarter with about $1.80 billion in cash and cash equivalents, so it could easily accelerate repurchases or increase its dividend in the second quarter.

Overall, it was a phenomenal quarter for Colgate-Palmolive, but its stock reacted by falling 0.3% in the next trading session. The shares began rallying a day later, however, and now sit substantially higher. Investors would not mind a similar performance following the second-quarter release.

What to expect when Colgate is expecting
Colgate has scheduled its second-quarter results for release before the market opens on July 31 and the current expectations call for modest growth; here's an overview:

MetricExpectedYear Ago
Earnings Per Share $0.73 $0.70
Revenue $4.40 billion $4.35 billion

Source: Estimize

The estimates above call for earnings per share to increase 4.3% and revenue to increase 1.2% year-over-year, and this kind of growth seems well within reach for a company with Colgate's size and market share. Key metrics aside, here are four other important statistics and updates investors will want to watch for:

  1. Third-Quarter Outlook: It will be very important for Colgate to provide an outlook on the third quarter that meets the expectations of analysts; currently, the consensus estimates call for earnings per share of $0.77 and revenue of $4.50 billion, representing year-over-year growth of 5.5% and 2.3%, respectively. 
  2. Full-Year Outlook: Along with satisfactory guidance for the third quarter, it will also be important for Colgate to reaffirm its full-year outlook on fiscal 2014; this outlook, provided in its first-quarter report, calls for earnings-per-share growth of 4%-5%, "strong" organic sales growth, and expansion of its gross margin.
  3. Share Repurchases: Watch for the total amount of shares repurchased during the quarter and make sure Colgate is utilizing its $1.80 billion in cash and cash equivalents to return additional cash to shareholders. The company spent $453 million on repurchases in the first quarter, which was impressive, but I think it could surpass $500 million in repurchases in the second quarter.
  4. Market Share Data: It will also be important to keep an eye on Colgate's updated global market share information for the oral care industry; in the second quarter of fiscal 2013, Colgate reported a 45.4% share of the toothpaste market and a 33.3% share of the manual toothbrush market, so watch closely and make sure these numbers keep steady, or better yet, rise.
If Colgate can meet or exceed earnings per share and revenue estimates and also provide a satisfactory outlook on the second half of the year, its shares could easily rally to a new 52-week high, which would also result in new all-time highs; I am confident that Colgate will do just this, and in addition, I believe investors could buy in right now because it has shown consistent growth over the last several quarters and trades at favorable forward multiples, while its healthy 2% dividend will provide additional returns and protection to the downside.

Source: Wikipedia

The Foolish bottom line
Colgate-Palmolive is one of the most dominant companies within any industry and its current 44.3% share of the global toothpaste market displays its power perfectly. The company has watched its stock rise steadily throughout 2014 and I believe it will receive another push higher following its second-quarter earnings release. Foolish investors should consider initiating positions in Colgate-Palmolive today, not to simply trade it going into earnings, but because it represents a great long-term investment opportunity today.