Colgate-Palmolive (NYSE:CL) Surprises With Q4 Sales

Radek Strnad /
2024/01/26 7:07 am EST

Consumer products company Colgate-Palmolive (NYSE:CL) announced better-than-expected results in Q4 FY2023, with revenue up 6.9% year on year to $4.95 billion. It made a non-GAAP profit of $0.87 per share, improving from its profit of $0.77 per share in the same quarter last year.

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Colgate-Palmolive (CL) Q4 FY2023 Highlights:

  • Market Capitalization: $66.87 billion
  • Revenue: $4.95 billion vs analyst estimates of $4.88 billion (1.4% beat)
  • EPS (non-GAAP): $0.87 vs analyst estimates of $0.85 (2.6% beat)
  • Free Cash Flow of $939 million, similar to the previous quarter
  • Guidance for 2024 revenue growth of 1-4% year on year (vs. expectations of ~3% year on year growth)
  • Gross Margin (GAAP): 59.6%, up from 55.6% in the same quarter last year
  • Organic Revenue was up 7% year on year (beat vs. expectations of up 6.4% year on year)

Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE:CL) is a consumer products company that focuses on personal, household, and pet products.

Household Products

Household products companies engage in the manufacturing, distribution, and sale of goods that maintain and enhance the home environment. This includes cleaning supplies, home improvement tools, kitchenware, small appliances, and home decor items. Companies within this sector must focus on product quality, innovation, and cost efficiency to remain competitive. Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options.

Sales Growth

Colgate-Palmolive is one of the largest consumer staples companies and benefits from a strong brand, giving it customer trust and leverage in many purchasing and distribution negotiations.

As you can see below, the company's annualized revenue growth rate of 5.7% over the last three years was mediocre as consumers bought less of its products. We'll explore what this means in the "Volume Growth" section.

Colgate-Palmolive Total Revenue

This quarter, Colgate-Palmolive reported solid year-on-year revenue growth of 6.9%, and its $4.95 billion in revenue outperformed Wall Street's estimates by 1.4%. Looking ahead, Wall Street expects sales to grow 3.1% over the next 12 months, a deceleration from this quarter.

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Key Takeaways from Colgate-Palmolive's Q4 Results

We were impressed by Colgate-Palmolive's beat on organic revenue growth and reported revenue. We were also glad its gross margin outperformed Wall Street's estimates, which ultimately led to a bottom-line EPS beat. 2024 guidance was within roughly in line with expectations, showing that the company is staying on track. Overall, we think this was a solid quarter that should satisfy shareholders. The stock is flat after reporting and currently trades at $81.28 per share.

So should you invest in Colgate-Palmolive right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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