By Sam Boughedda
Colgate-Palmolive (NYSE:CL) shares dipped early Friday after it posted second quarter earnings premarket, topping expectations.
Despite the share price fall, the company reported earnings of $0.72 per share, $0.01 better than the analyst estimate of $0.71. Meanwhile, revenue for the quarter came in at $4.48 billion versus the consensus estimate of $4.36 billion.
Net sales increased 5.5%, with the company experiencing growth in every division and all four categories.
Noel Wallace, Colgate-Palmolive's Chairman, President, and Chief Executive Officer, said the company was "encouraged by the increase in our global toothpaste market share year to date led by share growth in the U.S. where our focus on more premium innovation is driving share gains."
However, like most companies, they experienced headwinds, with significant increases in raw and packaging material and logistics costs and currencies remaining volatile.
"We acted boldly on pricing and are accelerating our revenue growth management plans, including additional pricing, in the balance of the year," added Wallace.
Looking ahead, the company raised its organic sales growth guidance for the full-year 2022 to 5% to 7%.
Following the results, a Stifel analyst maintained a Hold rating and $85 price target on Colgate-Palmolive shares, stating they reported "strong 2Q22 results with organic sales growth of 9%, above 6% consensus with EBIT of $897mm, consensus of $881mm."
"We view the result favorably, particularly sales growth, with 9% the strongest rate of growth since 4Q08. Additionally, sequentially, volumes accelerated on a y/y and 2-year basis despite higher pricing. Topline continued to be driven by Hill's, organic sales up 18%, with Latin America up 12.5%, reflecting increased pricing. We anticipate CL shares to outperform modestly, with strong organic sales growth and unchanged EPS expectations largely anticipated by investors," added the Stifel analyst.
In addition, a Goldman Sachs analyst, who kept a Buy rating and $89 price target on the stock, told investors: "CL reported 2Q22 EPS of $0.72, which was in line with our estimate and marginally ahead of consensus (vs. GS/FactSet consensus $0.72/$0.71). As has generally been the theme in CPG, higher pricing drove higher than expected organic sales growth, while gross margins were slightly below consensus (albeit in line with our estimate)."
"Moreover, management retained its FY22 net sales and EPS outlook, as an expectation for higher organic growth was balanced by higher FX headwind to sales, EBIT, and EPS growth (now -MSD vs. -LSD prior); we are encouraged by CL's retained FY22 outlook despite higher FX headwinds and expect the stock to outperform peers today as a result."