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Will Colgate (CL) Retain Positive Earnings Streak in Q2?


Consumer goods behemoth, Colgate-Palmolive Company CL is scheduled to report second-quarter 2017 results on Jul 21, 2017, before the opening bell. Last quarter, the company posted an earnings surprise of 1.5%.

Colgate has been infamous among investors with its meet or beat earnings track record. Notably, the company has posted in-line earnings in four of the last seven quarters while it surpassed estimates in the remaining three. Thus, the company’s average positive earnings surprise is pegged at 0.7% for the trailing four quarters.

Colgate-Palmolive Company Price and EPS Surprise

Colgate-Palmolive Company Price and EPS Surprise | Colgate-Palmolive Company Quote

What to Expect?

The question lingering in investors’ minds now is whether Colgate will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is 72 cents, reflecting a year-over-year increase of 2.6%. We note that the Zacks Consensus Estimate has been stable ahead of the earnings release. Analysts polled by Zacks expect revenues of $3.89 billion, up 1.1% from the year-ago quarter.

We note that the stock has underperformed both the Zacks categorized Soap & Cleaning Preparations industry and the S&P 500 Index in the last three months. The company’s shares have declined 2.6%, while the Zacks categorized industry and the S&P 500 have witnessed gains of 1.2% and 5.2%, respectively.

Factors at Play

Colgate, which enjoys a market-leading position in the oral care and personal care product categories, continues to focus on product innovations, globally recognized brands and broad international presence in both developed and emerging markets. Further, it is focused on these plans to take advantage of growth opportunities, consequently enhancing profitability.

Moreover, the company continues to progress well with savings programs, as both, Global Growth and Efficiency Program or 2012 Restructuring Program, and Funding the Growth undertakings are delivering impressive results. These initiatives contributed significantly to margin expansion in first-quarter 2017.

However, the company’s sales trend remains soft largely due to unfavorable currency movements. The company lagged sales estimates in 15 out of the past 16 quarters. Moreover, adverse currency and a tough global environment are likely to impact 2017 results. Nonetheless, organic sales are anticipated to improve sequentially throughout the year.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Colgate is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Colgate has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 72 cents. While the company’s Zacks Rank #2 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

McDonald's Corporation MCD currently has an Earnings ESP of +3.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar Inc. CAT currently has an Earnings ESP of +11.67% and a Zacks Rank #2.

Whole Foods Market Inc. WFM currently has an Earnings ESP of +2.94% and a Zacks Rank #3.

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