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.
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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.
