Colgate-Palmolive Company

(New York Stock Exchange)
Back to all articles
Slightly Bullish +25

Colgate-Palmolive (CL) Earnings on Deck: What to Watch

AI-generated analysis

πŸ“ˆ Colgate-Palmolive (CL) beat EPS estimates for four consecutive quarters with an average beat of about 3%.

πŸ“‰ Q1 net sales grew 8.4%, but organic sales excluding currency and acquisitions only increased by 2.9%.

πŸ’° Gross margins slipped 20 basis points to 60% in the first quarter.

🌍 Strong growth came from outside North America, with Latin America, Europe, and Asia Pacific posting solid numbers.

πŸ“‰ North American sales fell sharply, causing operating profit to drop significantly in the region.

⚠️ Management flagged roughly $300 million in additional raw material and logistics costs for 2026.

πŸ›’οΈ Spending on oil byproducts, including resins and fats, is running more than 20% higher year over year.

πŸ“‰ Logistics costs are up nearly 10% across both ocean and land freight operations.

πŸ“‰ Colgate cut its full-year gross margin guidance as a result of rising input costs.

πŸ’° The company kept its full-year sales and EPS guidance intact despite the margin cut.

🌍 Emerging markets are working well, with Asia Pacific and Latin America delivering strong growth.

🐾 Hill's pet nutrition business is holding up well as consumers prioritize pet spending over their own.

πŸ’΅ The dividend remains untouchable with a quarterly payout of $0.53 per share and a yield near 2.3%.

🦷 Colgate holds a 41% global toothpaste market share, providing a genuine moat in the category.

⚠️ Rising oil prices undercut current guidance assumptions, potentially leading to further margin cuts.

Bullish Signals
  • Colgate-Palmolive has beaten EPS estimates in each of the last four quarters with an average beat of about 3%.
  • Emerging markets are driving growth, with Asia Pacific and Latin America posting strong numbers due to pricing actions and improving volumes.
  • The pet nutrition business is resilient, with Hill's continuing to grow as consumers prioritize pet spending over their own.
  • Colgate maintains a robust dividend history, having raised its payout for decades with a current yield near 2.3%.
  • The company holds a dominant 41% global toothpaste market share, providing a defensive moat in a recession-resistant category.
Risk Factors
  • Gross margins slipped 20 basis points to 60% in the first quarter.
  • North American sales fell and operating profit dropped sharply due to intensified competition and consumer trade-downs.
  • Management flagged roughly $300 million in additional raw material and logistics costs for 2026, with oil byproduct spending up over 20% year-over-year.
  • Colgate cut its full-year gross margin guidance as a result of rising input costs, expecting margins to fall on both reported and adjusted bases.
  • Rising oil prices near $90 due to Middle East tensions threaten the assumptions behind current financial guidance.
  • The FX tailwind can reverse quickly if the dollar strengthens, which would cause reported growth to drop fast from its organic base.
  • North America faces structural challenges including tariff costs that hit without relief and a need for brand interventions to fix volume issues.
Full Analysis
Colgate-Palmolive (CL) is set to report second-quarter 2026 earnings on Friday, following a first quarter where the company beat EPS estimates for four consecutive quarters. However, Q1 results revealed a divergence in performance: while net sales grew 8.4% driven by a significant foreign exchange tailwind, organic sales rose only 2.9%. Gross margins slipped 20 basis points to 60%, and North America saw sales decline sharply despite strong growth in Latin America, Europe, and Asia Pacific. Management has flagged approximately $300 million in additional raw material and logistics costs for 2026, with oil byproduct spending up over 20% year-over-year. Consequently, Colgate cut its full-year gross margin guidance, expecting margins to fall on both reported and adjusted bases, though it maintained sales and EPS guidance of 2-6% and 1-4% respectively. The company faces rising input costs due to Middle East tensions pushing oil prices near $90, which threatens the assumptions behind current financial projections. Key strengths include a robust dividend history with a yield near 2.3%, a dominant 41% global toothpaste market share providing a defensive moat, and resilient pet nutrition business where Hill's continues to grow. Conversely, risks persist in North America due to intensified competition, consumer trade-downs to private labels, and tariff costs that have forced volume sacrifices. The stock trades at roughly 24.5 times forward earnings, leaving little margin for error given the threat of rising input costs and potential FX headwinds if the dollar strengthens.