Colgate-Palmolive Co. – Zacks Elite Stock of the Day
Source: http://www.zacks.com/commentary/8584/Colgate-Palmolive+Co.+-+Zacks+Elite+Stock+of+the+DayPosted on Sunday, September 14th, 2008 | In Stocks to Watch
Colgate-Palmolive Co.’s (CL) share price recently broke above a key level of resistance and has firmly planted itself in higher territory. The recent surge comes after the company reported strong second-quarter results on July 29.
Revenue jumped 16% to $3.96 billion. Net income totaled $493.8 million, up from $415.8 million last year. This produced earnings of 98 cents per share, ahead of analyst estimates of 94 cents per share.
Colgate said that it raised its prices by 4.5%, the largest increase in more than 10 years, without experiencing a slowdown in either sales or income.
Colgate also reported strong international sales and a bullish earnings forecast into 2009.
Four Consecutive Beats
This is the fourth time in four quarters that Colgate has been able to surprise and beat analyst estimates, having done so by an average of 2 cents, or 2.49%.
Estimates Rising
The current-year estimate has been on the move, advancing to $3.89 per share from $3.84 per share last month. The next-year estimate is projecting 11% earnings growth, forecasting earnings of $4.33 per share. Based upon the current-year projection, this stock is trading with a forward P/E multiple of 20X, a premium to the overall market.
Strong Demand
Colgate has been able to sidestep higher commodity prices that have been plaguing other companies. CEO Ian cook said that the increases would lift the company’s margins but not until next year. In this challenging market, Colgate is proving to be a steady player. All of the company’s individual business segments scored higher revenue and operating profits.
The Chart
Shares of Colgate have been rallying since bouncing from the short-term low above $66 in late July. This recent price surge places shares very close to the 52-week high just above $82. Take a look at the chart below.
“CL” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research
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 About Michael Vodicka (http://www.zacks.com/)
Michael is an Editor at Zacks Investment Research who covers the Momentum and Aggressive Stocks for the Zacks Rank Buys. |
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