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.