Colgate-Palmolive (NYSE:CL) reports second-quarter 2026 results on Friday. Let’s analyze where the stock stands heading into the print.
Colgate has beaten EPS estimates in each of the last four quarters, with an average beat of about 3%.
The setup from last quarter
Colgate’s first quarter showed the split that defines this stock right now. Net sales grew 8.4%. Organic sales, which strip out currency and acquisitions, grew just 2.9%. The gap came from foreign exchange, which delivered a large tailwind.
Gross margin slipped 20 basis points to 60%.
Growth came from outside North America. Latin America, Europe, and Asia Pacific all posted strong numbers. North America went the other way, with sales falling and operating profit dropping sharply.
The margin problem
This is the number to watch Friday.
On the first-quarter call, management flagged roughly $300 million in additional raw material and logistics costs for 2026. Two-thirds of that comes from raw materials, one-third from logistics. Spending on oil byproducts, which covers resins, petrochemicals, fats, and oils, is running more than 20% higher year over year. Logistics costs are up nearly 10% across both ocean and land freight.
Colgate cut its full-year gross margin guidance as a result. It had expected margins to rise. It now expects them to fall, on both a reported and adjusted basis. The company kept its sales and EPS guidance intact: net sales up 2% to 6%, organic sales up 1% to 4%.
Oil prices are rising as Middle Tensions are back. If management holds its full-year guidance despite oil back near $90, that’s a real signal of confidence. If it trims, the market will take that badly.
The bull case
Emerging markets are working. Asia Pacific and Latin America both delivered strong growth last quarter, helped by pricing actions and improving volumes. Management has pointed to emerging market volume trends as a bright spot.
Hill’s keeps growing. Pet nutrition has held up well, and consumers tend to cut spending on themselves before they cut spending on their pets.
The dividend is untouchable. Colgate has raised its dividend for decades. The quarterly payout sits at $0.53 per share, for a yield near 2.3%.
Market share leadership is real. A 41% global toothpaste share is a genuine moat in a category people buy regardless of the economy.
The bear case and risks
Input costs are getting worse, not better. Oil prices undercut the assumptions behind current guidance. Resins, petrochemicals, fats, and oils feed directly into Colgate’s packaging and formulations. If crude stays elevated, the margin guidance cut from May won’t be the last one.
The FX tailwind can reverse. A big chunk of last quarter’s 8.4% sales growth came from currency, not demand. Organic growth of 2.9% is the honest number. If the dollar strengthens, reported growth drops fast.
North America keeps struggling. Toothpaste competition intensified, consumers traded down to private label, and tariff costs hit without relief. Colgate chose to protect price over volume, and volume suffered. Management called for “brand interventions,” which is a signal the region needs fixing.
Valuation leaves no room for error. The stock trades near 24.5 times forward earnings. That’s a full multiple for a company guiding to low-to-mid single-digit adjusted EPS growth. Investors are paying a premium for defensiveness, and defensiveness is exactly what rising input costs threaten.
Photo from Colgate website
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