In This Article:
Colgate-Palmolive Company CL stock is doing well on the bourses, thanks to its robust strategic efforts. Shares of this renowned consumer goods company have gained 19.1% in a year, outperforming the Zacks Soap and Cleaning Materials industry’s 11.8% growth and the broader Consumer Staples sector’s 4.4% rise.
The company has been gaining from pricing and productivity initiatives for a while. CL’s innovation strategy has also been proven successful. Let’s delve deep.
Analyzing Colgate’s Core Strengths
Colgate’s innovation strategy concentrates on growing in adjacent categories and product segments. The company 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. Its 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. CL has been seeing market share growth for its Hill’s Science Diet and Hill’s Prescription Diet across the specialty channels, driven by its science-led innovation and improved brand support.
The company has revamped its innovation model, leveraged global strength across price tiers and invested in marketing and capabilities, all of which contribute to solid brand health and household penetration.
Colgate has been gaining from strong pricing and the benefits of funding-the-growth program and other productivity initiatives. In the most recent quarter, pricing improved 3.1% year over year, backed by positive pricing across all divisions, except for North America.
CL Stock Price Performance
Image Source: Zacks Investment Research
Bumps in CL’s Growth Trajectory
Colgate is not immune to challenging macroeconomic backdrop and inflationary pressures. Raw material cost inflation and the continued rise in packaging act as deterrents to the company’s profitability.
Increased adjusted selling, general and administrative and advertising expenses are concerning too. In its last earnings call, management had anticipated higher advertising costs for 2024, both on a dollar basis and as a percentage of sales.
Unfavorable foreign currency fluctuations are also hurting the company’s performance. The sales view for 2024 includes a mid-single-digit negative impact of currency.
Final Words on Colgate
CL’s pricing and productivity initiatives are likely to address cost issues ahead. Analysts seem quite optimistic about the company.
The Zacks Consensus Estimate for CL’s 2025 sales and earnings per share (EPS) indicates an increase of 3.2% and 7.3%, respectively, year over year. Colgate currently carries a Zacks Rank #3 (Hold).