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Colgate-Palmolive Q3 Earnings: Can NYSE:CL Hit Its $0.70 EPS Target?

in EARNINGS/INVESTING IDEAS by

Colgate-Palmolive Company (NYSE:CL) is scheduled to report Q3 earnings results on October 30, 2020.

The company is expected to report earnings of $0.70/share on revenue of $3.999 billion. The consensus earnings per share (EPS) of $0.70/share is based on a poll of 17 analysts and represents a decline in eps of −0.9% over the same quarter last year, when the company reported earnings of $0.71/share.

The revenue forecast of $3.999 billion based on a poll of 13 analysts implies a year-over-year (YoY) growth in revenue of 1.8%. Last year the company reported $3.928 billion in revenue for the quarter.

Expected to report EPS contraction of −0.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,998.80 $3,928.00 1.8%
EPS $0.70 $0.71 −0.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters and met expectations 3 quarters.

What are your expectations from Colgate-Palmolive Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.69 $0.74 6.6% Beat
Q1, 2020 $0.73 $0.75 2.7% Beat
Q4, 2019 $0.73 $0.73 0% Met
Q3, 2019 $0.70 $0.71 1.3% Beat
Q2, 2019 $0.72 $0.72 0% Met
Q1, 2019 $0.66 $0.67 1.5% Beat
Q4, 2018 $0.73 $0.74 0.9% Beat
Q3, 2018 $0.72 $0.72 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 31, 2020 $76.87 $77.20 0.4% Increase
May 1, 2020 $70.27 $68.53 −2.5% Decline
January 31, 2020 $69.47 $73.78 6.2% Increase
November 1, 2019 $68.60 $66.81 −2.6% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.86, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.86 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Colgate-Palmolive Company is currently trading at $78.69/share, down −0.8% for the day. The company is trading at approximately 97.2% of its 52-week high of $80.99/share. The company’s stock price is up 1.9% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.32 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.24 and a forward P/E multiple of 26.85.

Colgate-Palmolive Company’s current share price also implies a price-to-book (P/B) multiple of 251.75. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $78.69
P/E Ratio 26.2x
P/E Ratio (Fwd) 26.8x
PEG Ratio 1.9
Total Debt / Total Capital 9.8%
Levered Free Cash Flow $3.33 billion
EV / EBITDA 17.8x

Finbox

Colgate-Palmolive Company is a large-cap stock with a market capitalization of $67.469 billion and a total enterprise value of $74.311 billion. The company operates in the Consumer Staples sector and the Household Products industry.

Colgate-Palmolive Company, together with its subsidiaries, manufactures and sells consumer products worldwide. The company operates through two segments, Oral, Personal and Home Care; and Pet Nutrition. The Oral, Personal and Home Care segment products include toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants, skin health products, dishwashing detergents, fabric conditioners, household cleaners, and other similar items. This segment markets and sells its products to various retailers, wholesalers, and distributors. The Pet Nutrition segment offers pet nutrition products for everyday nutritional needs; and a range of therapeutic products to manage disease conditions in dogs and cats. This segment markets and sells its products for dogs and cats through pet supply retailers, veterinarians, and e-commerce retailers. Its principal global and regional trademarks include Colgate, Palmolive, elmex, meridol, Tom’s of Maine, Sorriso, Hello, Speed Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sanex, Filorga, Elta MD, PCA Skin, Ajax, Axion, Fabuloso, Soupline, and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet. Colgate-Palmolive Company was founded in 1806 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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