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Can Colgate (CL) Beat Q3 Earnings Estimates Amid Cost Woes?
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Colgate-Palmolive Company (CL - Free Report) is expected to register top-line growth when it reports third-quarter 2022 numbers on Oct 29, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $4.5 billion, which indicates a rise of 1.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s earnings is pegged at 74 cents per share, suggesting a decline of 8.6% from the prior-year quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
We expect the company’s third-quarter net sales to increase 2.5% year over year to $4,523.4 million and the bottom line to decline 7.9% to 75 cents per share.
In the last reported quarter, the company reported an earnings beat of 1.4%. It has delivered an earnings surprise of 0.99%, on average, in the trailing four quarters.
The leading global consumer products company is expected to have gained from consumer demand for personal care, hygiene and home care products. Colgate has been driving growth via product innovation, in-store implementation and expansion plans. Increased focus on premiumization and digital transformation also bodes well. These are likely to have aided the third-quarter 2022 performance.
Colgate’s top-line performance is expected to have benefited from brand strength and increased product pricing across all regions to combat rising costs.
The company has been focusing on the premiumization of its Oral Care portfolio through major innovations. Its premium innovation products, including CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste, have been performing well. This is expected to have boosted organic sales growth for its oral care business in the third quarter. We anticipate organic sales growth of 7.7% for the third quarter.
Expanding product availability through enhanced distribution to newer markets and channels is one of Colgate’s priorities to improve organic sales. The company has been aggressively expanding into faster growth channels, while extending the geographic footprint of its brands. Colgate has also been focused on expanding the availability of its products through the e-commerce channel, as more consumers have been using online services for their essential needs. Gains from the company’s expansion efforts are likely to get reflected in the to-be-reported quarter’s results.
Colgate’s Hill's business has been witnessing momentum, which is expected to have delivered sales growth in the third quarter. Strength in Hill's Prescription Diet and Hill's Science Diet has been aiding sales for the segment. The company’s newly launched Prescription Diet Derm Complete has been gaining market share. This is expected to have boosted sales in the third quarter. For the third quarter, we expect 8.2% revenue growth for the Hill's business.
However, higher raw material and logistic costs worldwide have been concerning despite sales growth. Each of the company’s segments has been incurring significantly higher raw and packaging material costs. Higher logistics costs have been resulting from volume and capacity constraints in the shipping and logistics industry, higher e-commerce demand, and the impact of the Ukraine war. These headwinds are likely to have continued to impact the third-quarter performance.
Moreover, the company has been witnessing a deleverage in advertising and SG&A expenses, which have been weighing on margins. These costs and headwinds are likely to have hurt the bottom-line performance in the to-be-reported quarter. We expect third-quarter GAAP SG&A expenses, as a percentage of total revenues, to deleverage 20 basis points to 36.9%. As a result, we anticipate a GAAP operating margin contraction of 200 basis points to 19.9%.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Colgate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Colgate has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Clorox (CLX - Free Report) currently has an Earnings ESP of +6.10% and a Zacks Rank #3. CLX is anticipated to register top and bottom-line declines when it reports third-quarter 2022 results. The Zacks Consensus Estimate for Clorox’s quarterly revenues is pegged at $1.69 million, indicating a decline of 6.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Clorox’s bottom line has moved up by a penny in the past seven days to 73 cents per share. However, the consensus estimate for CLX suggests a decline of 39.7% from the year-ago quarter’s reported figure. CLX has delivered an earnings beat of 9.3%, on average, in the trailing four quarters.
Kellogg's (K - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #3. K is likely to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.8 billion, which suggests growth of 4% from the figure reported in the prior-year quarter.
However, the Zacks Consensus Estimate for Kellogg's quarterly earnings has been unchanged in the past 30 days at 96 cents per share, suggesting a decline of 11.9% from the year-ago quarter’s reported number. K has delivered an earnings beat of 13.3%, on average, in the trailing four quarters.
Hershey (HSY - Free Report) currently has an Earnings ESP of +1.94% and a Zacks Rank of 3. The company is expected to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for HSY’s quarterly revenues is pegged at $2.6 billion, which suggests growth of 10.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Hershey’s quarterly earnings has moved up by a penny in the past seven days to $2.07 per share. However, the consensus estimate for HSY suggests a 1.4% decline from the year-ago reported number. HSY has delivered an earnings beat of 8.7%, on average, in the trailing four quarters.
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Can Colgate (CL) Beat Q3 Earnings Estimates Amid Cost Woes?
Colgate-Palmolive Company (CL - Free Report) is expected to register top-line growth when it reports third-quarter 2022 numbers on Oct 29, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $4.5 billion, which indicates a rise of 1.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s earnings is pegged at 74 cents per share, suggesting a decline of 8.6% from the prior-year quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
We expect the company’s third-quarter net sales to increase 2.5% year over year to $4,523.4 million and the bottom line to decline 7.9% to 75 cents per share.
In the last reported quarter, the company reported an earnings beat of 1.4%. It has delivered an earnings surprise of 0.99%, on average, in the trailing four quarters.
ColgatePalmolive Company Price and EPS Surprise
ColgatePalmolive Company price-eps-surprise | ColgatePalmolive Company Quote
Key Aspects to Note
The leading global consumer products company is expected to have gained from consumer demand for personal care, hygiene and home care products. Colgate has been driving growth via product innovation, in-store implementation and expansion plans. Increased focus on premiumization and digital transformation also bodes well. These are likely to have aided the third-quarter 2022 performance.
Colgate’s top-line performance is expected to have benefited from brand strength and increased product pricing across all regions to combat rising costs.
The company has been focusing on the premiumization of its Oral Care portfolio through major innovations. Its premium innovation products, including CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste, have been performing well. This is expected to have boosted organic sales growth for its oral care business in the third quarter. We anticipate organic sales growth of 7.7% for the third quarter.
Expanding product availability through enhanced distribution to newer markets and channels is one of Colgate’s priorities to improve organic sales. The company has been aggressively expanding into faster growth channels, while extending the geographic footprint of its brands. Colgate has also been focused on expanding the availability of its products through the e-commerce channel, as more consumers have been using online services for their essential needs. Gains from the company’s expansion efforts are likely to get reflected in the to-be-reported quarter’s results.
Colgate’s Hill's business has been witnessing momentum, which is expected to have delivered sales growth in the third quarter. Strength in Hill's Prescription Diet and Hill's Science Diet has been aiding sales for the segment. The company’s newly launched Prescription Diet Derm Complete has been gaining market share. This is expected to have boosted sales in the third quarter. For the third quarter, we expect 8.2% revenue growth for the Hill's business.
However, higher raw material and logistic costs worldwide have been concerning despite sales growth. Each of the company’s segments has been incurring significantly higher raw and packaging material costs. Higher logistics costs have been resulting from volume and capacity constraints in the shipping and logistics industry, higher e-commerce demand, and the impact of the Ukraine war. These headwinds are likely to have continued to impact the third-quarter performance.
Moreover, the company has been witnessing a deleverage in advertising and SG&A expenses, which have been weighing on margins. These costs and headwinds are likely to have hurt the bottom-line performance in the to-be-reported quarter. We expect third-quarter GAAP SG&A expenses, as a percentage of total revenues, to deleverage 20 basis points to 36.9%. As a result, we anticipate a GAAP operating margin contraction of 200 basis points to 19.9%.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Colgate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Colgate has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Clorox (CLX - Free Report) currently has an Earnings ESP of +6.10% and a Zacks Rank #3. CLX is anticipated to register top and bottom-line declines when it reports third-quarter 2022 results. The Zacks Consensus Estimate for Clorox’s quarterly revenues is pegged at $1.69 million, indicating a decline of 6.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Clorox’s bottom line has moved up by a penny in the past seven days to 73 cents per share. However, the consensus estimate for CLX suggests a decline of 39.7% from the year-ago quarter’s reported figure. CLX has delivered an earnings beat of 9.3%, on average, in the trailing four quarters.
Kellogg's (K - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #3. K is likely to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.8 billion, which suggests growth of 4% from the figure reported in the prior-year quarter.
However, the Zacks Consensus Estimate for Kellogg's quarterly earnings has been unchanged in the past 30 days at 96 cents per share, suggesting a decline of 11.9% from the year-ago quarter’s reported number. K has delivered an earnings beat of 13.3%, on average, in the trailing four quarters.
Hershey (HSY - Free Report) currently has an Earnings ESP of +1.94% and a Zacks Rank of 3. The company is expected to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for HSY’s quarterly revenues is pegged at $2.6 billion, which suggests growth of 10.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Hershey’s quarterly earnings has moved up by a penny in the past seven days to $2.07 per share. However, the consensus estimate for HSY suggests a 1.4% decline from the year-ago reported number. HSY has delivered an earnings beat of 8.7%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.