We have issued an updated research report on Colgate-Palmolive Co. CL on Jun 1, 2015.
Colgate’s significant international presence exposes the company to various risks associated with foreign laws and regulations; foreign consumer preferences; global economic challenges; disruptions or delays in shipments, and currency fluctuations, all of which could negatively affect operations.
In fact, the ongoing foreign currency headwinds impacted Colgate’s first-quarter 2015 financial results, reflected by a respective year-over-year decline of 6% and 3% in sales and earnings per share. Though earnings per share were in line with the Zacks Consensus Estimate, sales fell short of it. Moreover, the company expects macroeconomic and currency headwinds to linger throughout 2015.
While Colgate remains hopeful about its organic results, we believe that the aforementioned challenges will weigh on the company’s performance throughout 2015. Consequently, the Zacks Consensus Estimate has witnessed a downward trend over the last 60 days.
Apart from this, Colgate faces intense competition from other well-established players in the industry on the basis of pricing, promotional activities and new product introductions. The failure to offer exclusive high-quality products at competitive prices may hamper the company’s market share, and in turn, dent its top and bottom-line performances.
However, Colgate commands a market-leading position in the oral care and personal care product categories. Also, its continued focus on product innovation, globally recognized brands and presence in both developed and emerging economies enable it to tap growth opportunities and boost profitability.
Colgate currently carries a Zacks Rank #4 (Sell).
Key Picks from the Sector
Better-ranked stocks in the consumer staples sector include Helen of Troy Limited HELE, with a Zacks Rank #1 (Strong Buy), Unilever NV UN and Unilever plc UL, each with a Zacks Rank #2 (Buy).
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