When companies are about to report earnings, investors would do well to look at the prior earnings report to try and find trends that may continue over the next few quarters. With Colgate-Palmolive Company (NYSE:CL)’s earnings report right around the corner, there are four trends that shareholders should hope will continue.
Growth and Income on a Global Scale
There are two things that define Colgate-Palmolive Company (NYSE:CL)’s current market position. First, the company competes against some of the most well-known companies in the world. Colgate competes against titans such as The Procter & Gamble Company (NYSE:PG), The Clorox Co (NYSE:CLX), and Kimberly Clark Corp (NYSE:KMB). Each of these companies generates billions in sales all over the world, and has some of the most well-known brands in history.
In addition, each of these companies offers investors similar yields and earnings growth rates. One reason investors might choose to overlook Colgate-Palmolive Company (NYSE:CL) is their relatively lower yield at about 2.3%. Since investors can get a 3% yield from The Procter & Gamble Company (NYSE:PG), and about 3.3% from both The Clorox Co (NYSE:CLX) and Kimberly Clark Corp (NYSE:KMB), Colgate’s yield might not look competitive.
That being said, Colgate-Palmolive Company (NYSE:CL) leads their peers when it comes to expected earnings growth. In the next few years, analysts expect earnings growth of over 9%, whereas all of its peers is expected to grow earnings by less than 8%. Relatively speaking, Colgate-Palmolive Company (NYSE:CL)’s faster expected earnings growth helps to offset the company’s slightly lower yield.
Sales Growth and Signs of Stability
When comparing multi-billion dollar companies, one of the best ways to determine which one has the strongest sales momentum is by looking for strong volume growth. While it’s hard to compare Colgate-Palmolive Company (NYSE:CL) to its peers because they each report sales differently, it’s fairly clear that the company has volume growth on its side.
In the company’s last earnings report, Colgate-Palmolive said that unit volume was up 3.5% in North America, 5.5% in Latin America, and 11% in the Greater Asia/Africa region. The only region to show flat volume growth was Europe, which isn’t surprising considering the weakness in the region. By comparison, The Procter & Gamble Company (NYSE:PG) reported volume growth in three of its five divisions, and Kimberly Clark Corp (NYSE:KMB) reported volumes up 3% and 4% in its two largest divisions; The Clorox Co (NYSE:CLX) fell behind with mostly 1% volume increases. This leads us to the first thing investors should look for in Colgate-Palmolive’s upcoming earnings report: continued strength in organic volume growth across the company’s geographic divisions.
