Yahoo Finance New Brands to Boost Colgate's Personal Care Range in 2018
Colgate-Palmolive Co. CL has signed agreements to acquire two professional skin care brands, PCA Skin and EltaMD. The acquisitions are in sync with Colgate’s strategy to focus on high-margin oral care, personal care and pet nutrition businesses.
While the terms of the deals remain under cover, management expects both transactions to close in the first quarter of 2018. However, the company does not expect the acquisitions of the fastest-growing professional skin care brands to influence its earnings in 2018.
PCA Skin provides medical-grade in-office and take-home skin care products. The brand is also supported by highly professional dermatologists,plastic surgeons and aestheticians. EltaMD is a leader in physician-dispensed sun care services. Together, these brands are expected to generate about $100 million sales in 2017.
Having nearly the same size, these brands are mainly distributed in the U.S., China and certain other international markets, through professional skin care channels and online.
Following the acquisitions, Colgate plans to operate these brands separately. These are likely to open Colgate’s doors to the professional skin care market, strengthening the company’s global personal care business. Moreover, the buyouts will enhance its presence in the premium global skin care category as these brands have complementary product portfolios and sales forces, and comparable distribution channels.
Furthermore, Colgate’s decade-long heritage of delivering strong recommendations by professional experts to its customers should benefit the high-growth, higher-margin brands.
Colgate’s Strategic Values
Colgate-Palmolive commands a market-leading position in the oral care and personal care product categories. Colgate’s continued global brand recognition and focus on product innovations and in-store implementations enhance its profitability and increases consumer satisfaction.
Colgate closed trading at $74.85, yesterday. Overall, the stock has gained nearly 4.9% in the last three months, against the industry’s decline of 0.4%.
In its last reported third quarter of 2017, this Zacks Rank #4 (Sell) company posted in-line earnings and topped sales estimates. Increased raw material and packaging costs restrained margins. The oral segment of Colgate faced a downturn as consumers shifted to Ayurvedic substitutes. Consequently, it had to resort to different strategic initiatives and incurred higher costs.
Stocks to Consider
Some better-ranked stocks in the Consumer Staples sector are Meredith Corporation MDP, Flowers Foods, Inc.FLO and Conagra Brands Inc.CAG, each carrying a Zacks Rank# 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meredith Corporation (MDP) has an average positive earnings surprise of 7.1% for the trailing four quarters and has a long-term earnings growth rate of 8%.
Flowers Foods, Inc.’s (FLO) average positive earnings surprise is 2.8% for the trailing four quarters. It has a long-term earnings growth rate of 6.1%.
Conagra Brands Inc. (CAG) delivered a positive average earnings surprise of 6.9% and has a long-term earnings growth rate of 7%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Conagra Brands Inc. (CAG) : Free Stock Analysis Report
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
Meredith Corporation (MDP) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
