Colgate to Aid by Innovation & Other Efforts: Should You Buy or Hold?

Colgate-Palmolive Company CL has been a renowned player in the consumer products space. The company has created a niche in consumers’ everyday essentials with its oral care, household, healthcare and personal care products. Its innovation strategy has also been successful.Hence, the company has maintained its strong leadership in the toothpaste and toothbrush markets. In the most recent earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 40.9% global market share year to date. Colgate also continued to lead the manual toothbrush market with a 31.9% global market share year to date.Let’s Analyze Colgate’s Core StrengthsColgate’s strategy of offering premium products and scaling capabilities to aid brands and increase household penetration remains on track. The company is focused on delivering value-added science-based core innovation, including the re-launch of Colgate Total and the Hill's Science Diet with ActivBiome technology to add value to its products.The company continues to invest in brands and key product categories, which drive sales and overall profitability. CL’s innovation strategy focuses on adjacent categories and product segments, alongside the premiumization of its Oral Care portfolio. Also, at-home whitening and professional whitening products bode well.Bold pricing actions and accelerated revenue-growth management plans have been bolstering Colgate’s organic sales. On an organic basis, the company’s sales advanced 1.4% in the first quarter of 2025, backed by a 1.5% improvement in pricing. Its robust pricing efforts have been bolstering margins for a while. CL’s gross margin and Base Business gross margin expanded 80 basis points (bps) and operating margin increased 120 bps year over year during the first quarter of 2025.Colgate is gaining from strong pricing, and funding-the-growth and other productivity initiatives. We note that the company has changed most of its sourcing strategies and invested roughly $2 billion in the supply chain in the United States over the past five years. This positions it well to adapt to a tough operating landscape.Bumps in Colgate’s Growth PathChallenging macroeconomic conditions, including the inflationary pressures and tariff concerns, might act as deterrents. Raw material inflation is likely to hurt the company’s performance. Higher adjusted selling, general and administrative (SG&A) and advertising expenses, as a percentage of sales, remain concerning. On its last earnings call, management cited that uncertainty and volatility across the global markets and the impact of tariffs have been challenging. In addition, consumer uncertainty and a slowdown in category pricing remain headwinds. CL is not immune to the adverse impacts of foreign exchange. Sales view for 2025 includes a low-single-digit negative impact of unfavorable currency exchange rates.Final CallNevertheless, Colgate has been developing plans to tackle the tariffs in the short, medium and long term, comprising the alternative sourcing, formula simplification, shifting production and revenue-growth initiatives. Management is confident of the strategic initiatives and strength in the global portfolio, and hence will accomplish the financial goals for 2025.Backed by such key catalysts and robust innovation efforts, the company reported solid first-quarter 2025 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. Earnings also improved year over year. 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. CL's shares have gained 3.2% in the past three months, outperforming the industry's 0.7% rise.Image Source: Zacks Investment ResearchManagement projects net sales to grow in low single digits, with organic sales increasing 2-4% year over year in 2025. On a non-GAAP (Base Business) basis, the company expects the gross profit margin to be nearly flat, as a percentage of sales, and earnings per share (EPS) to grow low single digits. Colgate currently carries a Zacks Rank #3 (Hold).Stocks to Consider in the Consumer Staples SpaceNomad Foods NOMD, which manufactures frozen foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year EPS indicates growth of 7.3% from the year-ago number.Mondelez International MDLZ, which is a leader in the snack food industry, currently carries a Zacks Rank #1. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for MDLZ’s current financial-year sales indicates growth of 5.3% from the year-ago number.Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2 (Buy) at present. UTZ delivered a trailing four-quarter average earnings surprise of 6.9%.The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.4% and 10.4%, respectively, from the year-ago numbers.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Mondelez International, Inc. (MDLZ): Free Stock Analysis Report Nomad Foods Limited (NOMD): Free Stock Analysis Report Utz Brands, Inc. (UTZ): 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