Colgate Delivers Solid Q4 Results; Issues Guidance

Colgate-Palmolive Company (CL) delivered solid fourth-quarter results characterized by continued growth in the oral care and pet nutrition businesses. Organic sales growth came in above the targeted range of 3% to 5%. CL shares rose 0.42% to close at $83.05 on January 28.

Colgate-Palmolive Company produces and distributes personal care, oral care, health care, and veterinary products.

Financial Results

Net sales for the quarter rose 2% year-over-year to $4.40 billion, slightly below consensus estimates of $4.43 billion. Diluted earnings per share increased 3% year-over-year to $0.79, in line with consensus estimates.

The company retained its leadership in the toothpaste segment with a 39.4% market share while controlling a 30.9% market share in the manual toothbrush market.

Colgate-Palmolive is projecting sales to grow by 1% and 4% for the full year. Organic sales are expected to grow within the company’s long-term target range of 3% to 5%.

Colgate-Palmolive is embarking on a Global Productivity Initiative program designed to reallocate resources towards strategic initiatives. It also plans to drive operational efficiencies and streamline the supply chain to reduce structural costs.

The implementation of the program should result in cumulative pre-tax charges of between $200 and $240 million. Pre-tax savings are expected to range between $90 and $110 million.

Stock Rating

Last week, J.P. Morgan analyst Andrea Faria Teixeira reiterated a Hold rating on Colgate-Palmolive stock with an $86 price target, implying 3.55% upside potential to current levels.

Consensus among analysts is a Hold based on 1 Buy, 6 Holds, and 1 Sell. The average Colgate-Palmolive price target of $85.71 implies 3.20% upside potential to current levels.

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