CL Q3 Earnings Top Estimates, Favorable Currency Aids Organic Sales

Colgate-Palmolive Company CL has reported third-quarter 2025 results, wherein the bottom line beat the Zacks Consensus Estimate while sales missed. Both sales and earnings per share (EPS) improved year over year. Results benefited from organic sales growth and pricing gains. The company is focused on investing in scaling its capabilities in key areas, such as digital, data and analytics, to enhance competitive advantages and drive profitability.On a Base Business basis (non-GAAP basis), earnings were 91 cents per share, flat year over year. The bottom line surpassed the Zacks Consensus Estimate of 89 cents.Net sales of $5.131 billion rose 2% from the year-ago quarter but missed the Zacks Consensus Estimate of $5.135 billion marginally. On an organic basis, the company’s sales advanced 0.4%, which includes a 0.8% unfavorable impact of reduced private-label pet volume. Net sales included a positive currency effect of 1.2%.The Zacks Rank #4 (Sell) company's shares have lost 8.8% in the past three months compared with the industry’s decline of 5.3%. Image Source: Zacks Investment Research Detailed Picture of CL's Q3 ResultsColgate's organic sales were driven by a 1.9% year-over-year drop in organic volume and a 2.3% improvement in pricing. Reported volume declined 1.5% in the third quarter. We estimated organic sales growth of 2.1% for the quarter under review, with a 2.2% rise in pricing and a 0.1% decrease in volume.In the earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 41.2% global market share year to date. In addition, Colgate continued to lead the manual toothbrush market with a 32.4% global market share year to date.The base business gross profit of $3.0.5 billion decreased 1.1% from the year-ago quarter. The company’s third-quarter base business gross profit margin contracted 190 basis points (bps) to 59.4%. We expected the adjusted gross margin to contract 60 bps to 60.7%.Adjusted selling, general and administrative (SG&A) expenses totaled $1.97 billion, down 0.3% from $1.98 billion in the prior-year quarter. We expected the adjusted SG&A expenses, as a percentage of sales, to decline 20 bps to 39.1% for the third quarter.The company’s adjusted operating profit of $1.06 billion declined 2% year over year. The adjusted operating profit margin contracted 90 bps year over year to 20.6%. We expected the adjusted operating margin to contract 30 bps to 21.2% for the third quarter.Colgate-Palmolive Company Price, Consensus and EPS Surprise  Colgate-Palmolive Company price-consensus-eps-surprise-chart | Colgate-Palmolive Company QuoteA Peek Into CL’s Segmental DiscussionNorth America’s net sales (19% of total sales) dipped 0.4% year over year on a reported basis and 0.5% on an organic basis. The sales decline was due to a decrease of 0.5% in volume offset by a 0.1% rise in pricing. Foreign currency aided sales by 0.1%.Latin America’s net sales (23% of the total sales) rose 2% year over year as a 3.6% pricing gain and a 0.3% favorable currency effect were offset by a 1.9% decline in volume. On an organic basis, regional sales rose 1.7%.Europe’s net sales (16% of the total sales) increased 7.6% year over year on a reported basis and 1.2% on an organic basis. Sales growth was driven by a 0.4% rise in pricing, a 0.8% increase in volume and a 6.4% positive currency effect.The Asia Pacific segment’s net sales (14% of the total sales) declined 1.5% year over year, reflecting a 3.5% drop in volume and a 0.5% unfavorable currency impact, offset by a 2.5% rise in pricing. Regional organic sales declined 1% year over year.Africa/Eurasia’s net sales (6% of the total sales) improved 6.8% year over year, driven by 7.3% growth in pricing and a 0.6% favorable currency effect, offset by a 1.1% drop in pricing. Organic sales for the segment advanced 6.2%.Hill’s Pet Nutrition’s net sales (22% of the total sales) improved 1.4% from the year-ago quarter on a reported basis and declined 1.3% on an organic basis. Results benefited from a 2.9% rise in pricing and a 1.1% favorable currency effect, offset by a 2.6% decline in reported volume. Organic volume for the segment declined 4.2%.CL's Other Financial InformationColgate ended third-quarter 2025 with cash and cash equivalents of $1.28 billion, and a total debt of $8.4 billion. Net cash provided by operating activities was $2.7 billion for the nine months ended Sept. 30, 2025. The free cash flow before dividends was $2.36 billion for the nine months ended Sept. 30, 2025.The company returned $2.1 billion in cash to its shareholders via dividends and share repurchases in the nine months ended Sept. 30, 2025.CL's 2025 OutlookColgate has revised its organic sales growth guidance for 2025 and has reiterated its earnings per share guidance. Based on the existing spot rates and reflecting the anticipated impacts of tariffs announced and in effect as of Oct. 29, management projects net sales to grow in the low-single digits, including a flat to low-single-digit adverse impact of foreign exchange.The company predicts an organic sales increase of 1-2%, down from its prior guidance of growth at the lower end of the 2–4% range.. This is nearly in line with year-to-date organic sales growth of 1.2%. The company’s organic sales guidance includes a 70 bps impact of its exit from private-label pet sales.On a GAAP and non-GAAP (Base Business) basis, management envisions gross profit margin to be in line with the year-to-date gross profit margin of 60.1% compared with the prior mentioned roughly flat gross margin. On a GAAP and non-GAAP (Base Business) basis, the company expects advertising investment to be nearly flat as a percentage of sales, and EPS to increase in the low-single digits.Here’s How Better-Ranked Stocks FaredOllie's Bargain Outlet OLLI is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Ollie's delivered a trailing four-quarter earnings surprise of 4.2%, on average. The Zacks Consensus Estimate for OLLI’s current financial-year sales and EPS indicates growth of 16.4% and 16.5%, respectively, from the year-ago reported numbers.Leslies LESL provides a direct-to-consumer brand in the U.S. pool and spa care industry, serving residential, professional and commercial consumers. The company currently carries a Zacks Rank #2. The Zacks Consensus Estimate for Leslies’ current financial-year sales implies a decline of 8.2% from the year-ago reported number. LESL delivered a trailing four-quarter average negative earnings surprise of 23.9%.Vital Farms VITL offers a range of produced pasture-raised foods. The company currently carries a Zacks Rank #2.The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 27.2% and 16.1%, respectively, from the year-ago reported numbers. VITL delivered a trailing four-quarter earnings surprise of 35.8%, on average.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Colgate-Palmolive Company (CL): Free Stock Analysis Report Ollie's Bargain Outlet Holdings, Inc. (OLLI): Free Stock Analysis Report Vital Farms, Inc. (VITL): Free Stock Analysis Report Leslie's, Inc. (LESL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks