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Colgate (CL) Q3 Earnings: What's in Store for the Stock?
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Consumer goods behemoth, Colgate-Palmolive Co. (CL - Free Report) is slated to report third-quarter 2016 results on Oct 27. Last quarter, the company delivered a positive earnings surprise of 1.5%, and has outperformed the Zacks Consensus Estimate by an average of 0.7% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Colgate, which has either beaten or matched earnings estimates in the past four quarters, has been gaining strength from its international brand recognition and innovative strategies. We believe that the company’s continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, enables it to capture growth opportunities and boost profitability.
However, Colgate continues to battle macroeconomic headwinds in various countries along with lingering currency woes. Foreign currency exchange hurt the company’s revenue growth by 5.5% in second-quarter 2016 and is expected to have a negative effect on 2016 sales as well. Nonetheless, even in the face of these challenges, management expects another year of robust organic sales growth on the back of new products across categories and geographical regions.
So, let’s wait and see if Colgate can counter the hurdles and continue with its beat-or-meet trend in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively show that Colgate is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Colgate currently has an Earnings ESP of -1.37%. This is because the Most Accurate estimate of 72 cents stands below the Zacks Consensus Estimate of 73 cents.
Zacks Rank: Colgate’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caterpillar Inc. (CAT - Free Report) , scheduled to release earnings on Oct 25, 2016, currently has an Earnings ESP of +2.70% and a Zacks Rank #2.
Amazon.com, Inc. (AMZN - Free Report) , slated to release earnings on Oct 27, 2016, currently has an Earnings ESP of +6.98% and a Zacks Rank #1. Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
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Colgate (CL) Q3 Earnings: What's in Store for the Stock?
Consumer goods behemoth, Colgate-Palmolive Co. (CL - Free Report) is slated to report third-quarter 2016 results on Oct 27. Last quarter, the company delivered a positive earnings surprise of 1.5%, and has outperformed the Zacks Consensus Estimate by an average of 0.7% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
COLGATE PALMOLI Price and EPS Surprise
COLGATE PALMOLI Price and EPS Surprise | COLGATE PALMOLI Quote
Factors Influencing This Quarter
Colgate, which has either beaten or matched earnings estimates in the past four quarters, has been gaining strength from its international brand recognition and innovative strategies. We believe that the company’s continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, enables it to capture growth opportunities and boost profitability.
However, Colgate continues to battle macroeconomic headwinds in various countries along with lingering currency woes. Foreign currency exchange hurt the company’s revenue growth by 5.5% in second-quarter 2016 and is expected to have a negative effect on 2016 sales as well. Nonetheless, even in the face of these challenges, management expects another year of robust organic sales growth on the back of new products across categories and geographical regions.
So, let’s wait and see if Colgate can counter the hurdles and continue with its beat-or-meet trend in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively show that Colgate is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Colgate currently has an Earnings ESP of -1.37%. This is because the Most Accurate estimate of 72 cents stands below the Zacks Consensus Estimate of 73 cents.
Zacks Rank: Colgate’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caterpillar Inc. (CAT - Free Report) , scheduled to release earnings on Oct 25, 2016, currently has an Earnings ESP of +2.70% and a Zacks Rank #2.
Big 5 Sporting Goods Corp. (BGFV - Free Report) , expected to report earnings on Oct 25, 2016, currently has an Earnings ESP of +3.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Amazon.com, Inc. (AMZN - Free Report) , slated to release earnings on Oct 27, 2016, currently has an Earnings ESP of +6.98% and a Zacks Rank #1.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>