Colgate-Palmolive Co. (CL) is scheduled to release its first-quarter 2011 results on Thursday, April 28, 2011. The Zacks Consensus Estimate for the quarter is pegged at 28 cents a share, representing a year-over-year fall of 54.7%.
Fourth Quarter & Fiascal 2010 Performance
Colgate-Palmolive Company posted fourth-quarter earnings of $1.24 per share, marginally outpacing the Zacks Consensus Estimate of $1.23 and prior-year quarter earnings of $1.21 per share.
For fiscal 2010, the company reported earnings per share of $4.31. It lagged behind the Zacks Consensus Estimate of $4.81 due to a one-time, non-cash, after-tax charge of $271.0 million resulting from a required accounting change.
Global net sales fell 2.5% year over year to $3,978 million as pricing remained flat while unit volume rose 1%, offset by a negative foreign exchange impact of 3.5%. On an organic basis, (excluding foreign exchange, acquisitions and divestitures), sales increased 1.0% in the quarter. Global net sales also fell short of the Zacks Consensus Revenue Estimate of $4,058 million.
Agreement of Analysts
Over the past 30 days, 3 of the 22 analysts covering Colgate for the first quarter of 2011 have revised their earnings estimates upward with one stray movement in the opposite direction. In the last 7 days, 1 analyst has decreased the estimate with no movement in the positive direction.
There is however a more upward bias for fiscal 2011. Five of the 25 analysts following the stock for 2011 have revised their estimates upward over the last 30 days with 1 analyst moving in the opposite direction.
Magnitude of Estimate Revisions
With no effect from earnings revisions by the analysts in the last 7 days and 30 days, the Zacks Consensus Estimates for the first quarter of fiscal 2011 remained unchanged at $1.16 per share. For fiscal 2011, the Consensus estimate has moved up by 1 cent to $5.06 in the last 30 days.
Surprise History
With respect to earnings surprises, Colgate showed a favorable trend in the last four quarters. The company has recorded positive surprises in the trailing four quarters with a low of 0.81% and a high of 4.31%. On an average, the earnings surprise was a positive 1.92%. Based on the current flow, we expect the company to come up with healthy results in the upcoming quarter.
Our Recommendation
Colgate-Palmolive is the industry leader in oral care and commands market-leading positions in many personal care product categories. Furthermore, a strong portfolio of globally recognized brands, including Colgate, Palmolive, Mennen, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, Elmex, Ajax and Axion, provides a competitive advantage to the company and strengthens its dominant position in the market.
Moreover, in an effort to further drive growth, Colgate seeks to capture significant opportunities by identifying and targeting consumer needs within its core categories. The company further focuses on innovation and the deployment of valuable consumer and shopper insights for developing successful new products regionally, which are rolled out on a global basis.
Colgate-Palmolive, which competes with names like Procter & Gamble Company (PG) and Church & Dwight Company Inc. (CHD), maintains a Zacks #3 Rank, translating into a short-term “Hold” recommendation. Our long-term recommendation on the stock remains “Neutral”.
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
COLGATE PALMOLI (CL): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
Zacks Investment Research
