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Colgate (CL) Fights On: Stock Surges Over 12% Year to Date
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Seems like there is no looking back for New York City-based Colgate-Palmolive Co. (CL - Free Report) as the stock keeps climbing the charts, come what may. This leading consumer staples stock has surged over 12% year to date.
Colgate is in good shape given its continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, which enables it to take advantage of growth opportunities and boost profitability. Further, the company’s international brand recognition and innovative strategies underscore its inherent strength.
Further, Colgate is leaving no stone unturned as it continues to progress well with its savings programs, with both its Global Growth and Efficiency Program or 2012 Restructuring Program and Funding the Growth undertakings reaping results. These programs are aimed at reducing structural costs, standardizing processes, opening new distribution centers, improving decision making, enhancing market share and thereby contributing significantly to the improvement of gross and operating margins over the long term.
The effect of these cost savings’ plans was visible from the gross margin growth witnessed in second-quarter 2016, which also exceeded the milestone 60% mark that was achieved in the preceding quarter. Further, the company continued with its solid earnings trend as second-quarter earnings topped estimates, while remaining flat year over year despite the prevalence of strong currency headwinds, the deconsolidation of Venezuelan operations and other tough economic conditions. In fact, the bottom line rose by double digits on a currency-neutral basis while organic sales grew 4.5%.
Making us more optimistic, the company anticipates delivering robust organic sales growth in 2016, backed by new products across categories and geographical regions, which should translate into double-digit organic earnings per share growth.
While all these factors bode well for Colgate, the company continues to battle lingering currency woes as nearly 75% of its business is generated outside the U.S. Foreign currency exchange hurt the company’s revenue growth by 5.5% in second-quarter 2016 and is expected to bear a negative impact on full-year 2016 sales as well. Also, stiff competition remains a threat.
Zacks Rank
Colgate currently holds a Zacks Rank #2 (Buy). Another well-placed stock in the Soaps and Cleaning Preparations industry is The Clorox Co. (CLX - Free Report) , carrying the same rank as Colgate. Other stocks worth considering in the broader consumer staples sector include Omega Protein Corporation and US Foods Holding Corp. (USFD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
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Colgate (CL) Fights On: Stock Surges Over 12% Year to Date
Seems like there is no looking back for New York City-based Colgate-Palmolive Co. (CL - Free Report) as the stock keeps climbing the charts, come what may. This leading consumer staples stock has surged over 12% year to date.
Colgate is in good shape given its continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, which enables it to take advantage of growth opportunities and boost profitability. Further, the company’s international brand recognition and innovative strategies underscore its inherent strength.
Further, Colgate is leaving no stone unturned as it continues to progress well with its savings programs, with both its Global Growth and Efficiency Program or 2012 Restructuring Program and Funding the Growth undertakings reaping results. These programs are aimed at reducing structural costs, standardizing processes, opening new distribution centers, improving decision making, enhancing market share and thereby contributing significantly to the improvement of gross and operating margins over the long term.
The effect of these cost savings’ plans was visible from the gross margin growth witnessed in second-quarter 2016, which also exceeded the milestone 60% mark that was achieved in the preceding quarter. Further, the company continued with its solid earnings trend as second-quarter earnings topped estimates, while remaining flat year over year despite the prevalence of strong currency headwinds, the deconsolidation of Venezuelan operations and other tough economic conditions. In fact, the bottom line rose by double digits on a currency-neutral basis while organic sales grew 4.5%.
COLGATE PALMOLI Price, Consensus and EPS Surprise
COLGATE PALMOLI Price, Consensus and EPS Surprise | COLGATE PALMOLI Quote
Making us more optimistic, the company anticipates delivering robust organic sales growth in 2016, backed by new products across categories and geographical regions, which should translate into double-digit organic earnings per share growth.
While all these factors bode well for Colgate, the company continues to battle lingering currency woes as nearly 75% of its business is generated outside the U.S. Foreign currency exchange hurt the company’s revenue growth by 5.5% in second-quarter 2016 and is expected to bear a negative impact on full-year 2016 sales as well. Also, stiff competition remains a threat.
Zacks Rank
Colgate currently holds a Zacks Rank #2 (Buy). Another well-placed stock in the Soaps and Cleaning Preparations industry is The Clorox Co. (CLX - Free Report) , carrying the same rank as Colgate. Other stocks worth considering in the broader consumer staples sector include Omega Protein Corporation and US Foods Holding Corp. (USFD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>