Shares of Colgate-Palmolive (CL -4.61%) pulled back today after the household products giant missed the mark on the top line in its fourth-quarter earnings report and gave a weak outlook.
As a result, the stock finished the day down 4.6%.
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Colgate comes up short
Revenue growth slowed down from earlier in the year as price hikes it had previously implemented rolled off.
Organic sales, which exclude acquisitions, divestitures, and foreign exchange, rose 4.3%, but overall revenue was down 0.1% to $4.94 billion, missing the consensus at $4.99 billion. The strong dollar accounted for the discrepancy as the company generates most of its revenue overseas.
Volume sales in the quarter were up 2.5% with growth in every region, while overall pricing was up 1.8%.
Operationally, the business remained strong with its gross margin rising 70 basis points to 60.3%. It also continued to lead the global toothpaste market with 41.4% and manual toothbrushes with 32.2% global market share.
On the bottom line, base business earnings per share rose from $0.87 to $0.91, which topped expectations at $0.89.
CEO Noel Wallace said the company delivered on its goals of “peer-leading growth while funding investment for future growth and building flexibility into our P&L to counter headwinds.”
What’s next for Colgate-Palmolive
Currency headwinds weighed on Colgate’s guidance as it sees flat revenue for fiscal 2025 on a mid-single-digit negative impact from currency exchange. Organic sales are on track with its long-term target of 3% to 5%. It also called for gross profit margin expansion and low- to mid-single-digit adjusted earnings-per-share growth.
Based on the consensus of $20.39 billion, Colgate’s revenue seemed to disappoint, though it’s hard to fault the company for currency headwinds.
Given that, the sell-off could be a buying opportunity for income investors.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Colgate-Palmolive. The Motley Fool has a disclosure policy.
