Market Overview

Colgate-Palmolive Earnings Preview: EPS and Revenue Growth Expected

Colgate-Palmolive Earnings Preview: EPS and Revenue Growth Expected

Colgate-Palmolive (NYSE: CL), maker of household and personal care products, is scheduled to report its second-quarter 2012 results Thursday morning, July 26. Investors will be hoping the company can build on four-straight quarters of revenue increases.

Expectations

Analysts on average predict that Colgate will report per-share earnings of $1.34 for the three months that ended in June, as well as almost $4.3 billion in revenue. In the same period of last year, the company reported a profit of $1.26 per share and nearly $4.2 billion in revenue. The earnings per share (EPS) estimate is the same as it was 60 days ago. And note that analysts have not underestimated Colgate's per-share earnings in more than ten quarters. First-quarter EPS were in line with consensus expectations.

The company said in the first-quarter report that price increases and growth in emerging markets helped offset higher costs and negative currency rates. The share price slipped more than 1 percent in the two days following the report.

Looking ahead to the current quarter, the consensus forecast calls for sequential and year-over-year growth of both EPS and revenue. And so far, analysts expect full-year per-share earnings growth of more than 6 percent, as well as for revenue to be less than 3 percent higher than in the previous year.

The Company

New York-based Colgate-Palmolive Company manufactures and markets consumer products worldwide. Its products include Colgate toothpaste, Palmolive dish soap, Speed Stick deodorant, Hill's Science Diet pet food and many others. The company is an S&P 500 component with a market capitalization of more than $48 billion.

Competitors include Clorox (NYSE: CLX) and Procter & Gamble (NYSE: PG). Both of these peers are scheduled to report their results in early August. Analysts expect to see declining earnings and sales from Procter & Gamble.

During the three months that ended in June, Colgate saw its share price rise to new highs in May and June while those of Procter & Gamble sold off. Colgate announced capacity expansion plans in India and it sold $500 million of medium-term notes.

Performance

Colgate's long-term EPS growth forecast is about 9 percent. Its price-to-earnings (P/E) ratio is higher than the industry average, but so is its operating margin. The return on equity is a whopping 101.44 percent, much higher than of the rivals mentioned above. Colgate has a dividend yield near 2.4 percent. But of analysts surveyed by Thomson/First Call, 16 out of 23 recommend holding shares. So not surprisingly, the current share price is higher than their mean price target.

The stock has pulled back more than 3 percent from a recent multiyear high of $106.06. The share price is 10.51 percent higher year-to-date and above the 200-day moving average. Over the past six months, the stock has outperformed the competitors mentioned above and the broader markets.

Posted-In: Earnings Long Ideas Short Ideas Previews Trading Ideas

 

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