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Initiatives span supply chain, sourcing, manufacturing, and overhead to sustain profitability.
Long-term, productivity gains aim to expand margins 50-100 bps annually while funding growth.
Colgate-Palmolive Company’s (CL - Free Report) Strategic Growth and Productivity Program is emerging as a critical lever in its margin story, particularly as the company navigates cost inflation and uneven category growth. Management emphasized that the program is designed to reshape the organization to be faster, more efficient and better aligned with long-term strategic priorities, while freeing up resources to fund brand investment and innovation. Colgate has indicated that it aims to achieve adjusted operating margins in the mid-25% range in the medium term, reflecting the combined impact of efficiency gains and strategic reinvestment.
In the third quarter of 2025, productivity initiatives played a meaningful role in offsetting significant raw material and packaging cost pressures. While higher input costs weighed heavily on gross margin, Colgate’s funding-the-growth initiatives delivered a notable benefit, partially cushioning the impact and underscoring the importance of internal efficiency as an earnings stabilizer. Management noted that these efforts contributed to a mid-single-digit improvement in operating margins on a year-over-year basis, highlighting the tangible benefit of the program.
These efforts span supply chain optimization, smarter sourcing, manufacturing efficiencies, and disciplined overhead management, all aimed at sustaining profitability without sacrificing brand support. Beyond near-term cost relief, the productivity program has a more strategic dimension. Management highlighted that the initiative enables a new operating model that supports its transition to a longer-term strategic plan. This includes leveraging data, analytics, and digital tools at scale, improving marketing effectiveness, and increasing supply chain flexibility to better respond to local market needs. Such structural changes are intended to deliver incremental margin expansion of 50–100 basis points annually over time rather than one-off savings.
That said, Colgate has been clear that the productivity program is not a short-term fix. The company expects benefits to build gradually, especially as savings are reinvested to drive category growth and market share gains. While external pressures like commodity costs and tariffs remain headwinds, consistent execution of this productivity agenda positions Colgate to protect margins and support sustainable earnings growth in the long run, helping the company steadily achieve its target adjusted operating margin.
Zacks Rundown for CL
Colgate’s shares have lost 12.3% in the past six months compared with the industry’s decline of 10.7%. CL currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, CL trades at a forward price-to-earnings ratio of 20.73X, higher than the industry’s average of 18.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CL’s current and next fiscal-year earnings implies year-over-year declines of 1.7% and 5.1%, respectively.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks have been discussed below:
The Vita Coco Company, Inc. (COCO - Free Report) develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. COCO currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago reported figures. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Monster Beverage Corporation (MNST - Free Report) engages in the development, marketing, sale and distribution of energy drink beverages and concentrates in the United States and internationally. MNST currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Monster Beverage's current fiscal-year sales and earnings implies growth of 9.6% and 22.8%, respectively, from the year-ago actuals. MNST delivered a trailing four-quarter earnings surprise of 5.5%, on average.
United Natural Foods, Inc. (UNFI) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago reported figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.
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Is Colgate's Productivity Program a Catalyst for Its Margins?
Key Takeaways
Colgate-Palmolive Company’s (CL - Free Report) Strategic Growth and Productivity Program is emerging as a critical lever in its margin story, particularly as the company navigates cost inflation and uneven category growth. Management emphasized that the program is designed to reshape the organization to be faster, more efficient and better aligned with long-term strategic priorities, while freeing up resources to fund brand investment and innovation. Colgate has indicated that it aims to achieve adjusted operating margins in the mid-25% range in the medium term, reflecting the combined impact of efficiency gains and strategic reinvestment.
In the third quarter of 2025, productivity initiatives played a meaningful role in offsetting significant raw material and packaging cost pressures. While higher input costs weighed heavily on gross margin, Colgate’s funding-the-growth initiatives delivered a notable benefit, partially cushioning the impact and underscoring the importance of internal efficiency as an earnings stabilizer. Management noted that these efforts contributed to a mid-single-digit improvement in operating margins on a year-over-year basis, highlighting the tangible benefit of the program.
These efforts span supply chain optimization, smarter sourcing, manufacturing efficiencies, and disciplined overhead management, all aimed at sustaining profitability without sacrificing brand support. Beyond near-term cost relief, the productivity program has a more strategic dimension. Management highlighted that the initiative enables a new operating model that supports its transition to a longer-term strategic plan. This includes leveraging data, analytics, and digital tools at scale, improving marketing effectiveness, and increasing supply chain flexibility to better respond to local market needs. Such structural changes are intended to deliver incremental margin expansion of 50–100 basis points annually over time rather than one-off savings.
That said, Colgate has been clear that the productivity program is not a short-term fix. The company expects benefits to build gradually, especially as savings are reinvested to drive category growth and market share gains. While external pressures like commodity costs and tariffs remain headwinds, consistent execution of this productivity agenda positions Colgate to protect margins and support sustainable earnings growth in the long run, helping the company steadily achieve its target adjusted operating margin.
Zacks Rundown for CL
Colgate’s shares have lost 12.3% in the past six months compared with the industry’s decline of 10.7%. CL currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, CL trades at a forward price-to-earnings ratio of 20.73X, higher than the industry’s average of 18.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CL’s current and next fiscal-year earnings implies year-over-year declines of 1.7% and 5.1%, respectively.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks have been discussed below:
The Vita Coco Company, Inc. (COCO - Free Report) develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. COCO currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago reported figures. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Monster Beverage Corporation (MNST - Free Report) engages in the development, marketing, sale and distribution of energy drink beverages and concentrates in the United States and internationally. MNST currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Monster Beverage's current fiscal-year sales and earnings implies growth of 9.6% and 22.8%, respectively, from the year-ago actuals. MNST delivered a trailing four-quarter earnings surprise of 5.5%, on average.
United Natural Foods, Inc. (UNFI) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago reported figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.