Colgate-Palmolive Company’s CL shares have gained 7.1% in the past three months, outperforming the Zacks Consumer Products - Staples industry’s growth of 1% and the broader Consumer Staples sector’s rally of 6.6%. CL stock has outpaced the S&P 500’s 8.3% decline.
Colgate is a renowned player in the consumer products space. The company has created a niche in consumers’ everyday essentials with its oral care, household, healthcare and personal care products. In the most recent earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 40.9% global market share year to date. Colgate also continued to lead the manual toothbrush market with a 31.9% global market share year to date.
Backed by such key catalysts and robust innovation efforts, the company reported solid first-quarter 2025 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. Earnings improved year over year while sales fell. Results benefited from organic sales growth, robust pricing performance and gross profit margin expansion. The company is focused on investing in scaling its capabilities in key areas such as digital, data and analytics to enhance competitive advantages and drive profitability.
CL Price Performance
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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 1.4% in the first quarter of 2025, backed by a 1.5% 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 key product categories, which drive sales and overall profitability. CL’s innovation strategy focuses on adjacent categories and product segments, alongside the premiumization of its Oral Care portfolio. Also, at-home whitening and professional whitening products bode well.
Colgate’s strategy of offering premium products and scaling capabilities to boost brand strength and increase household penetration remains on track. The company is focused on delivering value-added science-based core innovation, including the re-launch of Colgate Total and the Hill's Science Diet with ActivBiome technology to add value to its products. CL’s strategy is committed to selling daily-use products.
Colgate is gaining from strong pricing and funding-the-growth and other productivity initiatives. We note that the company has changed most of its sourcing strategies and has invested roughly $2 billion in its supply chain in the United States over the last five years. This positions it well to adapt to a tough operating landscape.
Bumps in Colgate’s Growth Path
Challenging macroeconomic conditions, including the inflationary pressures and tariff concerns, might act as deterrents. Raw material inflation is likely to hurt the company’s performance. Higher adjusted selling, general and administrative (SG&A) and advertising expenses, as a percentage of sales, remain concerning.
On its last earnings call, management cited that uncertainty and volatility across the global markets and the impact of tariffs have been challenging. In addition, consumer uncertainty and a slowdown in category pricing remain headwinds.
CL is not immune to the adverse impacts of foreign exchange. Sales view for 2025 includes a low-single-digit negative impact of unfavorable currency exchange rates.
Final Call
Nevertheless, Colgate is well-positioned to achieve consistent earnings per share (EPS) growth in the future. The company has been developing plans to tackle the tariffs in the short, medium and long term, comprising the alternative sourcing, formula simplification, shifting production and revenue-growth initiatives. Management is confident of the strategic initiatives and strength in the global portfolio, and hence will accomplish the financial goals for 2025.
Management projects net sales to grow in low single digits, with organic sales increasing by 2-4% year over year in 2025. On a non-GAAP (Base Business) basis, the company expects the gross profit margin to be nearly flat, as a percentage of sales, and EPS to grow low single digits. Colgate currently carries a Zacks Rank #3 (Hold).
Stocks to Consider in the Consumer Staples Space
Nomad Foods NOMD, which manufactures frozen foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
United Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2 (Buy).
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 manufactures salty snacks under popular brands and has a Zacks Rank of 2 at present. 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.
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