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Colgate's (CL) Innovation & Pricing Efforts Aid: Apt to Buy?
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Colgate-Palmolive Company (CL - Free Report) stock is in investors’ good books, thanks to its robust business strategies. The pricing and productivity initiatives have been driving the company’s performance for a while now. Its innovation strategy and shareholder-friendly moves also bode well.
Shares of this renowned consumer goods company have gained 31.9% in the past year compared with the industry’s 15.8% growth.
Let’s Find Out More
Colgate has been gaining from strong pricing and the benefits of funding-the-growth program and other productivity initiatives. The company has been implementing aggressive pricing for a while now, which boosted margins in the first quarter of 2024. The gross margin expanded 310 basis points to 60% on both GAAP basis and adjusted basis. As a result, adjusted basis earnings advanced 18% from the prior-year period.
Image Source: Zacks Investment Research
Additionally, the company’s innovation strategy is focused on growing in adjacent categories and product segments. It is focused on the premiumization of its Oral Care portfolio through major innovations. Backed by premium innovation, products including CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste have been performing well. Also, at-home whitening and professional whitening products bode well. The company’s Oral Care business has also been performing well. Some other notable efforts include the continued expansion of the Naturals and Therapeutics divisions as well as the Hello Products LLC buyout.
Regarding its shareholder-friendly efforts, Colgate is committed to rewarding shareholders with share buybacks and dividend payouts. Recently, it paid a dividend of 50 cents a share. On an annualized basis, the dividend rate is $2.00, up from $1.92 per share paid previously. Markedly, the company has paid uninterrupted dividends since 1895.
Bottlenecks to Growth
Colgate has been witnessing inflationary pressures and a tough macroeconomic environment for quite some time now. Raw material inflation and the continued rise in packaging also act as a deterrent to the company’s profitability. In addition, it has been witnessing continued volume softness in China and the headwind from lower private label growth as it transferred more of Hill’s volume into the pet nutrition manufacturing network. Foreign currency fluctuations are also acting as headwinds. The sales view for 2024 includes a mid-single-digit negative impact of currency compared with a low-single-digit negative impact expected earlier.
Final Thoughts
Nevertheless, Colgate has been making prudent initiatives to maneuver the aforesaid challenges. In addition, the accelerated revenue-growth management plans have been bolstering the company’s sales.
Analysts seem optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $20.2 billion and $3.53, respectively, indicating growth of 3.9% and 9.3%. A Growth Score of A further adds strength to this Zacks Rank #2 (Buy) company.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently sports a Zacks Rank of 1. VITL has a trailing four-quarter average earnings surprise of 102.1%.
The consensus estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 22.6% and 62.7%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year EPS indicates growth of 26.3% from the year-ago reported numbers.
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Colgate's (CL) Innovation & Pricing Efforts Aid: Apt to Buy?
Colgate-Palmolive Company (CL - Free Report) stock is in investors’ good books, thanks to its robust business strategies. The pricing and productivity initiatives have been driving the company’s performance for a while now. Its innovation strategy and shareholder-friendly moves also bode well.
Shares of this renowned consumer goods company have gained 31.9% in the past year compared with the industry’s 15.8% growth.
Let’s Find Out More
Colgate has been gaining from strong pricing and the benefits of funding-the-growth program and other productivity initiatives. The company has been implementing aggressive pricing for a while now, which boosted margins in the first quarter of 2024. The gross margin expanded 310 basis points to 60% on both GAAP basis and adjusted basis. As a result, adjusted basis earnings advanced 18% from the prior-year period.
Image Source: Zacks Investment Research
Additionally, the company’s innovation strategy is focused on growing in adjacent categories and product segments. It is focused on the premiumization of its Oral Care portfolio through major innovations. Backed by premium innovation, products including CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste have been performing well. Also, at-home whitening and professional whitening products bode well. The company’s Oral Care business has also been performing well. Some other notable efforts include the continued expansion of the Naturals and Therapeutics divisions as well as the Hello Products LLC buyout.
Regarding its shareholder-friendly efforts, Colgate is committed to rewarding shareholders with share buybacks and dividend payouts. Recently, it paid a dividend of 50 cents a share. On an annualized basis, the dividend rate is $2.00, up from $1.92 per share paid previously. Markedly, the company has paid uninterrupted dividends since 1895.
Bottlenecks to Growth
Colgate has been witnessing inflationary pressures and a tough macroeconomic environment for quite some time now. Raw material inflation and the continued rise in packaging also act as a deterrent to the company’s profitability. In addition, it has been witnessing continued volume softness in China and the headwind from lower private label growth as it transferred more of Hill’s volume into the pet nutrition manufacturing network. Foreign currency fluctuations are also acting as headwinds. The sales view for 2024 includes a mid-single-digit negative impact of currency compared with a low-single-digit negative impact expected earlier.
Final Thoughts
Nevertheless, Colgate has been making prudent initiatives to maneuver the aforesaid challenges. In addition, the accelerated revenue-growth management plans have been bolstering the company’s sales.
Analysts seem optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $20.2 billion and $3.53, respectively, indicating growth of 3.9% and 9.3%. A Growth Score of A further adds strength to this Zacks Rank #2 (Buy) company.
Other Stocks to Consider
Freshpet (FRPT - Free Report) , a pet food company, currently sports a Zacks Rank #1 (Strong Buy). FRPT has a trailing four-quarter earnings surprise of 118.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently sports a Zacks Rank of 1. VITL has a trailing four-quarter average earnings surprise of 102.1%.
The consensus estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 22.6% and 62.7%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year EPS indicates growth of 26.3% from the year-ago reported numbers.