Colgate-Palmolive Company’s (CL – Free Report) robust strategic efforts position it well for future growth. The company is benefiting from strong pricing, as well as funding-the-growth program and other productivity initiatives. CL’s innovation strategy and shareholder-friendly moves are also quite encouraging.
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for CL’s earnings per share (EPS) for 2025 indicates a 2.5% year-over-year increase. The consensus mark for 2026 sales and EPS implies growth of 4.2% and 8.1%, respectively, year over year.
Let’s Analyze Colgate’s Core Strengths
Bold pricing actions and accelerated revenue-growth management plans have been bolstering Colgate’s organic sales. On an organic basis, the company’s sales advanced 4.3% in the most recent quarter, backed by a 2.5% increase in volume and a 1.8% improvement in pricing. It is implementing aggressive pricing for the last few quarters, which have been bolstering margins.
Its innovation strategy has also been proven successful. The company continues to invest in brand health and innovation, which drive sales and overall profitability. CL’s innovation strategy focuses on adjacent categories and product segments, alongside premiumization of its Oral Care portfolio. Also, at-home whitening and professional whitening products bode well.
As part of its growth strategy, the company has agreed to buy Care TopCo Pty Ltd, which is the owner of the Prime100 pet food brand. This acquisition will offer its Hill’s Pet Nutrition division access to the rapidly growing fresh pet food category, alongside enhancing its science-led, veterinarian-endorsed specialty pet food diets. This will also reinforce its foothold in the Australian pet food market.
Colgate’s strategy of offering premium products and scaling capabilities to boost brand strength and increase household penetration remains on track. In addition, the company continues to invest in scaling capabilities in the major areas such as digital, and data and analytics across the organization. This paces up change and boosts competitive advantages, while improving profits.
Hindrance to Colgate’s Growth Path
However, challenging macroeconomic conditions, including the inflationary pressures, have been concerning. Raw material inflation and the continued rise in packaging also act as deterrents to the company’s profitability. Higher adjusted selling, general and administrative (SG&A) and advertising expenses remain concerning.
On its last earnings call, management had anticipated advertising investment to remain flat or increase slightly both in dollar terms and as a percentage of sales for 2025. Foreign currency fluctuations are also acting as headwinds. Sales view for 2025 included a mid-single-digit negative impact of unfavorable currency exchange rates.
What’s More?
CL’s pricing and productivity initiatives are likely to address cost issues ahead. Colgate also remains committed to rewarding shareholders with share buybacks and dividend payouts. The company returned $3.4 billion in cash to its shareholders via dividends and share repurchases during 2024. Markedly, it has paid uninterrupted dividends since 1895.
Recently, Colgate’s board has raised the quarterly dividend to 52 cents per share, up from the prior payout of 50 cents. This will be effective in the second quarter of 2025, payable May 15, 2025, to shareholders of record as on April 17, 2025. The board has also authorized the buyback of the company’s common stock, having an aggregate purchase price of up to $5 billion under its new share repurchase plan. This replaces its prior $5 billion share-repurchase program authorized in 2022.
Hence, Colgate is well-positioned to achieve consistent, compounded earnings per share (EPS) growth in 2025 and beyond. It expects 2025 net sales to remain relatively flat year over year. CL projects organic sales growth within its long-term target range of 3-5%. It anticipates gross profit margin expansion for the year.
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Shares of this key consumer products dealer have gained 4.2% compared with the industry’s 10.9% growth over the past three months. Colgate currently carries a Zacks Rank #3 (Hold).
Stocks to Consider in Consumer Staples Space
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UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.
The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS indicates growth of 1.9% and 485.7%, respectively, from the year-ago numbers.
Utz Brands (UTZ – Free Report) manufactures salty snacks under popular brands and has a Zacks Rank of 2 currently. UTZ delivered a trailing four-quarter average earnings surprise of 8.8%.
The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.2% and 10.4%, respectively, from the year-ago numbers.
Nomad Foods (NOMD – Free Report) , which manufactures frozen foods, currently carries a Zacks Rank of 2. NOMD delivered a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year EPS indicates growth of 3.1% from the year-ago number.
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