Colgate-Palmolive Company’s CL recent stock performance reflects strong investor confidence in its fundamentals and strategic initiatives. The company’s shares have seen a 7.2% improvement in the past month, outperforming the industry’s 4.8% growth, the Consumer Staples sector’s 1.9% decline and the S&P 500’s slight decline, suggesting resilience in a challenging market environment.

CL Stock's Past One Month Performance

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This growth could be attributed to multiple factors, including pricing strategies, strong brand equity, innovation and cost-saving initiatives. Colgate’s focus on premiumization, particularly in oral care and pet nutrition, along with its geographic diversification, may have contributed to its recent stock momentum.

CL’s Growth Momentum and Innovation-Driven Strategy

Colgate has been experiencing strong business momentum, leading to higher organic sales. The company’s organic sales growth in the fourth quarter of 2024 was driven by a combination of increased volume and improved pricing.

Colgate remains focused on investing in key areas such as digital, data and analytics to strengthen its competitive edge and enhance profitability. The company’s strategy of offering core and premium innovations, increasing advertising investments and scaling capabilities to strengthen its brand and expand household penetration continues to progress well.

Colgate’s innovation strategy is centered on expanding into adjacent categories and product segments while enhancing the premiumization of its Oral Care portfolio through major advancements. Products such as CO. by Colgate, Colgate Elixir toothpaste and Colgate enzyme whitening toothpaste have gained traction, supported by premium innovation.

Beyond Oral Care, Colgate is driving growth through the expansion of its Naturals and Therapeutics divisions, along with the acquisition of Hello Products LLC. It is also seeing market share gains for Hill’s Science Diet and Hill’s Prescription Diet in specialty channels, fueled by science-led innovation and enhanced brand support. The company has revamped its innovation model, leveraged global strength across price tiers, invested in marketing and has robust capabilities, all of which lead to solid brand health and household penetration.

CL’s Promising Outlook

Colgate remains optimistic about its growth prospects, fueled by ongoing business momentum. Colgate is well-positioned to achieve consistent, compounded earnings-per-share (EPS) growth in 2025 and beyond. Colgate expects 2025 net sales to remain relatively flat year over year. The company projects organic sales growth within its long-term target range of 3-5%, factoring in the planned exit from private-label pet nutrition throughout 2025.

It anticipates gross profit margin expansion for the year. Management forecasts a mid-single-digit growth in Base Business EPS for 2025. On an adjusted (Base Business) basis, Colgate foresees gross profit margin expansion. The company also projects low to mid-single-digit growth in Base Business adjusted EPS for 2025.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

What Keeps Investors Skeptical About CL?

Colgate has been grappling with certain challenges, including macroeconomic instability and foreign currency headwinds. Inflationary pressures, rising raw material costs and increased packaging expenses have weighed on profitability. In the fourth quarter, North America’s net sales declined on both a reported and organic basis, primarily due to a decrease in pricing despite an increase in volume.

In Latin America, strong pricing gains and volume growth were overshadowed by a significant unfavorable currency impact, leading to a decline in net sales. Additionally, lower private-label pet volumes contributed to a slight negative impact on overall performance. Foreign currency fluctuations are also acting as headwinds. The sales view for 2025 includes a mid-single-digit negative impact from unfavorable currency exchange rates.

Investment Opinion on CL Stock

Colgate’s strong pricing strategies, productivity initiatives and innovation-driven approach position it well for long-term growth. These factors make the stock attractive for investors with a long-term perspective, as the company continues to drive brand strength, expand household penetration and enhance profitability. However, ongoing macroeconomic challenges, inflationary pressures and foreign currency headwinds present near-term risks. Current investors should retain their positions in CL stock, while new investors might wait for a more favorable entry point. Colgate currently carries a Zacks Rank #3 (Hold).

Top 3 Consumer Staple Picks

Pilgrim’s Pride PPC, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently sports a Zacks Rank of 1 (Strong Buy). PPC delivered a positive earnings surprise of 25.7% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year earnings indicates a decline of 5.4% from the prior-year reported level.

Tyson Foods, Inc. TSN operates as a food company worldwide. It currently carries a Zacks Rank #2 (Buy). TSN delivered a trailing four-quarter earnings surprise of almost 52%, on average.

The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of almost 0.9% and 22.6%, respectively, from the prior-year reported levels.

Post Holdings POST, a consumer packaged goods holding company, has a Zacks Rank of 2 at present. POST has a trailing four-quarter average earnings surprise of 22.3%.

The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS implies growth of 0.3% and 2.2%, respectively, from the year-ago numbers.

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Colgate-Palmolive Company (CL) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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