Colgate-Palmolive Co. (CL) reported very solid 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 strength has enabled this stock to break the downward trend that had been in play for the last few months. The 52-week high is close at hand just short of $82. Take a look at the chart below.

“CL” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

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