Colgate-Palmolive Hits New High - Analyst Blog
The shares of Colgate-Palmolive Co. (CL)
reached a new 52-week high of $116.17 on Tuesday, Mar 6, gaining
momentum from the company’s consistent performance as well as an
encouraging outlook. This Zacks Rank #3 (Hold) global consumer
products company eventually closed at $115.71 yesterday, recording
a healthy return of 24.0% over the past year. Average volume of
shares traded over the last 3 months stands at approximately
1,695,860.
Other companies that created a new 52-week high recently include
Whirlpool Corp. (WHR), PVH Corp.
(PVH) and Constellation Brands Inc. (STZ).
Drivers that Triggered Momentum
An impressive record of either meeting or beating the quarterly
earnings expectations, a positive fiscal 2013 outlook and a decent
dividend yield are the factors that enabled the shares of Colgate
to reach a new high.
With respect to earnings surprises, Colgate has either met or
surpassed the Zacks Consensus Estimate for the last several
quarters, most recently topping it by 0.71% in the fourth quarter
of fiscal 2012.
On Jan 31, Colgate posted impressive quarterly results with strong
earnings and sales comparisons for the fourth quarter of fiscal
2012. The company posted adjusted earnings of $1.41 per share that
came a penny ahead of the Zacks Consensus Estimate and jumped 8.5%
year over year.
Global sales of $4,286 million inched up nearly 2.7% from the
prior-year quarter’s level of $4,172 million, primarily benefiting
from a 2.5% upside in pricing and 1.5% increase in global unit
volumes (excluding divested businesses), partially offset by a
negative impact of 1.5% from foreign exchange.
The company’s adjusted gross profit margin expanded 90 basis points
(bps) to 58.6%, driven by increased prices as well as cost savings
from the company’s funding-the-growth initiatives.
Looking ahead, Colgate-Palmolive anticipates its growth momentum to
continue in fiscal 2013 with gross margin expansion and
double-digit growth in earnings per share. However, lingering
macroeconomic concerns in Venezuela will remain a drag on its
financials in the coming quarters.
Colgate is also known for its shareholder friendly moves. The
company has been regularly increasing its dividend every year since
2001, presently paying an annual cash dividend of $2.48. This
currently yields a solid 2.1%, while the company has a payout ratio
of 47%.
Stock’s Key Indicators
Colgate currently trades at a forward P/E of 20.1x, a 4.1% premium
with the peer group average of 19.3x. Its price-to-sales ratio of
3.2 is significantly above the peer group average of 2.0. Moreover,
the company’s return-on-equity (ROE) and return-on-investment (ROI)
are 101.9% and 34.7%, respectively, which are notably higher than
the peer group average. The company’s strong fundamentals are well
supported by its long-term estimated EPS growth rate of 9.4%.
COLGATE PALMOLI (CL): Free Stock Analysis Report
PVH CORP (PVH): Free Stock Analysis Report
CONSTELLATN BRD (STZ): Free Stock Analysis Report
WHIRLPOOL CORP (WHR): Free Stock Analysis Report
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