Why Colgate-Palmolive’s EPS Failed to Impress Investors



Soft performance in the recent past

Colgate-Palmolive (CL) hasn’t impressed investors with its earnings in the past several quarters. The company has only surpassed analysts’ expectations in two quarters out of the past nine quarters, which is evident in the graph below. Soft sales and margin headwinds took a toll on the company’s bottom-line growth rate.

During the last reported quarter, Colgate-Palmolive reported adjusted EPS of $0.72, a 1.4% decrease on a YoY basis. The company blamed soft organic sales, adverse currency rates, and cost headwinds for the decline.

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In comparison, the company’s peers performed better on the earnings front despite higher cost pressure. For instance, Kimberly-Clark’s (KMB) adjusted EPS improved 6.7% during the last reported quarter. Meanwhile, Procter & Gamble’s (PG) earnings improved 2.8%. On the other hand, Clorox (CLX) and Church & Dwight (CHD) reported double-digit growth in their EPS thanks to the decline in the effective tax rate.

Outlook disappoints

Colgate-Palmolive’s bottom line is likely to remain pressured in the fourth quarter as the decline in sales and increased cost pressure from the continued inflation in packaging and raw materials cost is expected to remain a drag. Wall Street expects Colgate-Palmolive to report adjusted EPS of $0.74 in the fourth quarter, which reflects a YoY decline of about 2%.


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