Yahoo Finance Colgate (CL) Benefits From Strong Pricing & Other Efforts
Colgate-Palmolive Company CL has been gaining from strong pricing, and the benefits of funding growth and other productivity efforts. The company’s aggressive pricing actions, along with solid business momentum, boosted the top line and margins in fourth-quarter 2023. In addition, accelerated revenue growth management plans aided Colgate’s organic sales in the fourth quarter.
The company has been implementing aggressive pricing for the past few quarters, which boosted margins in fourth-quarter 2023. The gross profit margin expanded 400 basis points (bps) to 59.6% on both GAAP and adjusted basis. Consequently, adjusted earnings advanced 13% from the prior-year period.
In fourth-quarter 2023, net sales and organic sales increased 7% year over year. Volume rounded to flat in the reported quarter. Notably, 2023 highlighted the company’s fifth consecutive year of organic sales growth, either in line with or above the 3-5% long-term goal. It delivered balanced organic sales growth across all six divisions and all four categories. It saw an improved balance between pricing and volume at the end of the year.
Driven by the impressive results, Colgate anticipates net sales growth of 1-4% for 2024. The company expects organic sales growth within its long-term target of 3-5%. The company foresees gross profit margin expansion and increased advertising investment on both GAAP and adjusted basis. It expects adjusted earnings per share growth in the mid to high-single digits. On a GAAP basis, earnings per share are expected to increase in the double digits.
CL’s robust business trends have been well-reflected in its share price. Shares of this Zacks Rank #3 (Hold) company have gained 12.9% in the year-to-date period compared with the industry’s growth of 8.2%. It also fared better than the sector’s growth of 6.1% and the S&P 500’s rise of 9% in the same period.
The Zacks Consensus Estimate for Colgate’s 2024 sales and earnings suggests growth of 3.7% and 8.1%, respectively, from the year-ago reported numbers.
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Other Factors Driving Growth
CL has been benefitting from its innovation strategies and execution, which have been crafting the company’s growth story over the years. The company’s innovation strategy is focused on growing in adjacent categories and product segments. It is also focused on the premiumization of its Oral Care portfolio through major innovations.
Backed by its premium innovation, the company’s products like CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste have been performing well. Also, CL’s at-home whitening and professional whitening products have been well-received by customers.
Colgate’s Oral Care business has also been performing well, particularly in Africa. Some other notable efforts include the continued expansion of the Naturals and Therapeutics divisions, as well as the Hello Products LLC buyout.
Additionally, the popularity of Colgate’s professional skincare businesses — Elta MD and PCA Skin — in spas and at dermatologists continues to grow. Colgate has been witnessing positive customer feedback for its elmex and meridol brands, driven by increased investment. The company expanded its premium skincare portfolio with the buyout of the Filorga skincare business. It is witnessing strong market share gains in North America and China, its two largest markets, with increased share gains across all other regions.
Headwinds on the Path
However, the company has been witnessing higher raw and packaging material costs, which are acting as deterrents. Also, the foreign currency fluctuations are concerning. The sales view for 2024 includes a low-single-digit negative impact of currency.
Stocks to Consider
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Clorox CLX, e.l.f. Beauty ELF and Celsius CELH.
Clorox, engaged in the production, marketing and sale of consumer products in the United States and international markets, has a trailing four-quarter earnings surprise of 127.8%, on average. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Clorox’s current financial-year earnings suggests growth of 8.5% from the prior-year reported level. CLX shares have gained 7.1% year to date.
e.l.f. Beauty, operating as a cosmetic company, currently has a Zacks Rank #2. ELF shares have rallied 36% in the year-to-date period.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial year’s sales and earnings per share suggests growth of 71.6% and 83.1%, respectively, from the year-ago reported figures. ELF has a trailing four-quarter earnings surprise of 69.2%, on average.
Celsius, which specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements, currently carries a Zacks Rank #2. CELH shares have rallied 53% in the year-to-date period.
The Zacks Consensus Estimate for CELH’s current financial-year sales and earnings suggests growth of 41.6% each from the year-earlier actuals. CELLH has a trailing four-quarter earnings surprise of 67.4%, on average.
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Colgate-Palmolive Company (CL) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
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Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
