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Will Colgate-Palmolive Exceed Analysts’ 4Q16 Sales Estimates?

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Jan. 19 2017, Published 4:17 p.m. ET

Analysts’ expectations

Colgate-Palmolive (CL) is going to announce its fiscal 4Q16 results on January 27, 2017. Analysts expect revenue of $3.9 billion in 4Q16, which reflects a fall of 0.5% on a year-over-year basis. This estimate includes the adverse impact of foreign exchange fluctuations. The company has beaten analysts’ sales expectations only three times in the last 11 quarters.

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Recap of previous quarter

Colgate-Palmolive reported 3Q16 net sales of $3.9 billion, a fall of 3.3% from 3Q15, due to the impact of negative foreign exchange, lower volumes, the deconsolidation of its Venezuela business, and the divestment of its detergent business in the South Pacific. However, this decline was offset by a 3% increase in pricing.

Innovation expected to drive sales

Colgate-Palmolive is focusing on innovation to mitigate the impact of difficult macro conditions for consumer packaged goods. In the company’s 3Q16 conference call, chairman, president, and CEO Ian Cook spoke of several innovations, including the launch of the Soupline Complete Care line of fabric conditioner in 4Q16 in Europe. Cook also discussed the recent launch of the Sanex Men skin care range in Europe. It includes body washes, shampoo, and underarm protection. Colgate-Palmolive has also recently launched several other new products, including the Colgate 360 Charcoal Gold and Colgate Slim Soft Sensitive Gum Care toothbrushes.

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Analysts’ expectations for peers

In the quarter ended September 30, 2016, Procter & Gamble (PG), The Clorox Company (CLX), and Kimberly-Clark (KMB) reported sales growth of 0.0% (fiscal 1Q17), 4.0% (fiscal 1Q17), and -2.6% (fiscal 3Q16), respectively.

Procter & Gamble is scheduled to announce its fiscal 2Q17 results on January 20, 2017. Analysts expect the company to deliver fiscal 2Q17 revenue of $16.8 billion, which reflects a growth rate of -0.77% from a year prior. The negative sales growth estimate reflects the adverse impact of foreign exchange transactions due to the strengthening of the US dollar in the quarter ended December 31, 2016.

Clorox is expected to announce its fiscal 2Q17 results on February 3, 2017. Clorox’s fiscal 2Q17 revenue is expected to rise 4.4% to $1.4 billion on a year-over-year basis. Kimberly-Clark is scheduled to declare its fiscal 4Q16 results on January 24, 2017. Analysts expect the company’s sales to rise 0.22% to $4.6 billion. We’ll discuss Colgate-Palmolive’s segments in the next part of this series.

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