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Colgate-Palmolive Q3 Preview: Back-To-Back EPS Beats Inbound?

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The Zacks Consumer Staples sector has held up relatively well in 2022, down roughly 9% and easily outperforming the S&P 500.

Companies in the realm possess the ability to generate revenue in the face of many economic backdrops, helping explain why the sector has held up better than most.

A big-time player in the realm, Colgate-Palmolive (CL - Free Report) , is on deck to unveil quarterly earnings on October 28th before the market open.

Colgate-Palmolive distributes and produces a wide array of consumer products, including household, health care, and personal care products.

Currently, CL carries a Zacks Rank #4 (Sell) paired with an overall VGM Score of a D.

Let’s take a deeper dive into how the company shapes up heading into its print.

Share Performance & Valuation

Colgate-Palmolive shares have held up better than the general market YTD, down 12% vs. the S&P 500’s roughly 20% decline.

Zacks Investment Research
Image Source: Zacks Investment Research

Over the last three months, however, CL shares have marginally underperformed the S&P 500, down nearly 7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, CL shares trade at a 24.4X forward earnings multiple, a tick above its five-year median and reflecting a 25% premium relative to the Zacks Consumer Staples sector average of 19.6X.

The company carries a Value Style Score of a D.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have primarily been bearish in their earnings outlook, with four negative earnings estimate revisions coming in over the last several months. The Zacks Consensus EPS Estimate of $0.74 indicates a Y/Y decline in earnings of roughly 8.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

Colgate-Palmolive’s top-line is in better standing; the Zacks Consensus Sales Estimate of $4.5 billion suggests Y/Y revenue growth of 2%.

Quarterly Performance & Market Reactions

Colgate-Palmolive has primarily reported earnings in-line with the Zacks Consensus EPS Estimate, posting breakeven surprises in five of its last ten reports. However, CL registered a slight 1.4% EPS beat in its latest print.

Top-line results have consistently come in above expectations; CL has exceeded the Zacks Consensus Sales Estimate in eight of its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, it’s worth noting that CL shares have moved downward following five of its last six quarterly prints.

Putting Everything Together

CL shares have outperformed the market YTD but have slightly lagged over the last three months, indicating that the buying has slowed.

The company’s forward earnings multiple sits above its five-year median and Zacks Consumer Staples sector average.

Analysts have been bearish in their earnings outlook, and estimates suggest a Y/Y decline in earnings but an uptick in revenue, likely reflecting rising costs eating into margins.

The company has primarily reported earnings in line with the Zacks Consensus EPS Estimate, and the market hasn’t reacted well following the majority of its last six prints.

Heading into the release, Colgate-Palmolive (CL - Free Report) carries a Zacks Rank #4 (Sell) paired with an Earnings ESP Score of -0.3%.


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