Colgate-Palmolive (NYSE:CL) received a Buy rating from Goldman Sachs analyst Jason English following the release of strong third-quarter results and improved full-year 2023 outlook. The global consumer products behemoth’s performance was driven by solid demand for its products and higher price levels.
The analyst is positive about the company’s increased advertising and promotional spending. English sees 2023 as a turning point for consistent growth in Colgate’s EPS, which has remained relatively stable in recent years.
In terms of price performance, CL stock declined about 2% on Friday’s trading session.
CL’s Q3 Performance
Colgate-Palmolive reported EPS of $0.86, which comfortably beat estimates of $0.80 and improved 16% on a year-over-year basis. Meanwhile, revenue rose 10.5% year-over-year to $4.92 billion and outperformed the consensus estimates of $4.81 billion, driven by increased prices.
In terms of division-wise performance, Hill’s Pet Nutrition was the highest contributor to Colgate’s revenue in the reported quarter, as sales increased by 21.5%. Also, the Latin America and Europe divisions witnessed 20% and 14.5% growth, respectively. However, the Africa/Eurasia and Asia Pacific divisions witnessed a drop in sales of 7.5% and 4%, respectively.
CL Raises Sales Outlook
Based on impressive Q3 results, management raised the organic sales growth guidance. It now expects growth between 7% and 8%, up from the previous range of 5% to 7%.
Additionally, net sales are expected to rise in the range of 6% to 8%, compared with 5% to 8% previously. The company anticipates benefits from the pet food business acquisitions and a low-single-digit negative impact from foreign exchange headwinds.
Furthermore, the company raised its adjusted earnings forecast to a high-single-digit increase due to expectations of gross profit margin expansion and higher advertising investment.
Is Colgate a Good Stock to Buy Now?
Wall Street analysts are cautiously optimistic about Colgate-Palmolive stock. It has a Moderate Buy consensus rating based on eight Buys and six Holds. The average CL stock price target of $79.33 implies a 10.5% upside potential.
