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Colgate-Palmolive Co CL

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Colgate on Solid Footing, but Headwinds Could Lead to a Turbulent Fiscal 2021; Shares a Touch Rich

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

On the surface, there was a lot to like in wide-moat Colgate’s first-quarter results, including 5% organic sales growth (on top of 7.5% underlying growth a year ago) and 40 basis points of adjusted gross margin expansion to 60.7% (its sixth consecutive quarter north of 60%). And although this was met with 30 basis points of operating margin degradation to 23.1%, we attribute this pullback to a 10.5% jump in advertising expense to more than 12% of sales, which we view as a prudent means to support its brands and retail relationships.

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Company Profile

Business Description

Since its founding in 1806, Colgate-Palmolive has grown to become a leading global consumer product company. In addition to its namesake oral care line, the firm manufactures shampoos, shower gels, deodorants, and home care products that are sold in over 200 countries around the world (international sales account for about 75% of its consolidated total, including approximately 50% from emerging regions). It also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers.

300 Park Avenue
New York, NY, 10022-7499
T +1 212 310-2000
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 34,200