Colgate-Palmolive Stock Dropped 6.6% after Q3 Earnings



Colgate-Palmolive’s Q3 results were disappointing

Colgate-Palmolive (CL) stock fell 6.6% on October 26 after the company reported weaker-than-expected third-quarter results. Colgate-Palmolive’s third-quarter top and bottom lines remained below analysts’ expectations, which didn’t sit well with investors. Moreover, net sales, organic sales, margins, and earnings marked a YoY (year-over-year) decline, which isn’t an encouraging sign.

Volatility in Brazil, adverse currency rates, heightened competition in China, and cost headwinds took a toll on the company’s sales and profitability during the third quarter.

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To add to its woes, management expects the pressure on sales and margins to continue during the fourth quarter. Colgate-Palmolive’s top line is projected to see a YoY decline during the fourth quarter, reflecting adverse currency rates. Meanwhile, margins could continue to slide owing to lower net sales and higher raw and packaging material costs.

In comparison, the company’s peers including Kimberly-Clark (KMB) and Procter & Gamble (PG) impressed investors with their quarterly performances and reported stronger-than-expected results. Meanwhile, analysts expect both Church & Dwight (CHD) and Clorox (CLX) to report improved sales and earnings.

Stock performance

Colgate-Palmolive stock has underperformed its peers as well as the broader market so far this year. The company’s stock is down 21.0% on a YTD basis as of October 26. Meanwhile, Kimberly-Clark, Procter & Gamble, and Clorox have fallen 15.2%, 4.4%, and 0.6%, respectively.

Church & Dwight stock is up 15.7% YTD thanks to impressive sales and earnings growth in the first half of 2018. Meanwhile, the S&P 500 Index is down slightly.


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