Colgate (CL) An All-Time Favorite: Do You Hold Positions?

Colgate-Palmolive Co. (NYSE:CL) has displayed steady growth over the past five years, making it a stock for all times. Recording a year-to-date growth of over 7%, the stock has lived up to its growth trend that reflects a near 10% growth over the past year and a solid 68% growth in 5 years. Undoubtedly, this Zacks Rank #3 (Hold) stock has positioned itself as a market-leader in the oral and personal care products.

On a year-to-date basis through Mar 31, 2016, Colgate’s market share of manual toothbrushes reached 33.5%. Further, the company’s share in the global toothpaste market continued to grow, reaching 43.8%.

We believe that the company’s continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, enables it to capture growth opportunities and boost profitability. Also, the company has a solid track record of either matching or beating estimates.

Over the past two years, the company has delivered negative earnings surprise only in one quarter, while it met or beat estimates in the others. This draws an average positive surprise of 0.3% in the last two years.

COLGATE PALMOLI Price and Consensus

COLGATE PALMOLI Price and Consensus | COLGATE PALMOLI Quote

Keeping with this trend, Colgate had a strong start to 2016, with in line earnings for the first quarter and upbeat sales, which marked the company’s first sales beat in eleven quarters. Also, the company achieved a key milestone with adjusted gross margin rate reaching the 60% mark. Robust results in the quarter were backed by unit volumes growth, better pricing, emerging market growth and cost-savings from the funding-the-growth and 2012 Restructuring Program.

Further, Colgate anticipates robust organic sales growth in 2016 backed by new products across categories and geographical regions, which should translate into double-digits organic earnings per share growth. Consequently, the Zacks Consensus Estimate has been trending upwards.

While all these factors bode well for Colgate, the company continues to battle the lingering currency woes as nearly 75% of its business is generated outside the U.S. Foreign currency exchange hurt the company’s revenue growth by 8% in first-quarter 2016 and is expected to bear a negative impact on full-year 2016 sales as well. Also, stiff competition remains a threat.

Zacks Rank

A better-ranked stock in the same industry is Unilever (LON:ULVR) N.V. (NYSE:UN) with a Zacks Rank #2 (Buy). Other well-ranked stocks in the consumer staples sector include United Natural Foods, Inc. (NASDAQ:UNFI) and The J. M. Smucker Company (NYSE:SJM) , each sporting a Zacks Rank #1 (Strong Buy).