Colgate Q2 Earnings: Do Productivity Initiatives Suggest a Beat?

Colgate-Palmolive Company CL is expected to register a bottom-line decline when it reports second-quarter 2025 results on August 1, before the opening bell. The Zacks Consensus Estimate for second-quarter revenues is pegged at $5.1 billion, indicating growth of 0.03% from the year-ago quarter’s reported figure.

The consensus estimate for CL’s earnings is pegged at 89 cents per share and is expected to decline 2.2% year over year. The Zacks Consensus Estimate for earnings for the quarter has moved up by a penny in the past seven days.

In the last reported quarter, the company's earnings beat the consensus estimate by 5.8%. It has delivered an earnings surprise of 4%, on average, in the trailing four quarters.

What the Zacks Model Unveils for CL Stock

Our proven model does not conclusively predict an earnings beat for Colgate this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Colgate currently has an Earnings ESP of -0.11% and a Zacks Rank of 3.

Key Aspects to Note About CL

Colgate’s second-quarter performance is expected to have benefited from solid business momentum, supported by pricing, funding growth and other productivity initiatives. The company’s idea of delivering balanced organic sales growth, driven by improvements in all categories and divisions, and volume and pricing gains, has been driving its performance. CL’s brand strength, coupled with its focus on innovation, premiumization and digital transformation, is expected to have driven its performance in the to-be-reported quarter.

The company has been delivering a sequential rise in the gross margin for the past few quarters, driven by continued strong pricing, benefits from revenue growth management initiatives, strength in the funding-the-growth program and other productivity initiatives. Continued gains from these initiatives are expected to have led to a gross margin expansion in the to-be-reported quarter.

However, Colgate’s second-quarter 2025 performance is likely to have encountered continued headwinds from a combination of inflationary pressures, foreign currency fluctuations and soft performance across key regions. Markets like Latin America, which previously experienced significant pressure from currency devaluation despite growth in pricing and volume, have been vulnerable. These foreign exchange headwinds are expected to have continued eroding sales on a reported basis in the quarter under review.

Colgate-Palmolive Company Price and EPS Surprise

 

Colgate-Palmolive Company price-eps-surprise | Colgate-Palmolive Company Quote

In North America, the company has been facing lower sales and pricing, pointing to ongoing challenges in maintaining pricing power, likely driven by increased promotional activity and competitive market dynamics. If these trends continue into the second quarter of 2025, Colgate may face additional pressure on profitability, especially if elevated input and packaging costs persist.

On the last reported quarter’s earnings call, management anticipated the uncertainty and volatility across the global markets and the impacts of tariffs to remain challenging in the quarters ahead. In addition, consumer uncertainty and a slowdown in category pricing remain headwinds.

Our model predicts a sales decline of 0.3% for second-quarter 2025. This includes a 1% dip in Latin America, a 3% decline in North America, a 2.5% fall in the Asia Pacific and flat sales in Africa/Eurasia. This is expected to be offset by increases of 4.5% in Europe and 1.3% in Pet Nutrition. We expect volume growth of 0.2% and pricing gains of 2.1% for the second quarter.

CL’s Price Performance & Valuation

The recent market movements show that Colgate’s shares have lost 4.3% in the past three months compared with the industry's 2.5% decline.

From the valuation standpoint, CL trades at a forward 12-month P/E multiple of 22.71X, exceeding the industry average of 19.97X and below the S&P 500’s average of 22.87X. Colgate’s valuation appears quite pricey.

Stocks With the Favorable Combination

Here are some companies that, according to our model, have the right combination of elements to beat on earnings this reporting cycle.

Kimberly-Clark KMB currently has an Earnings ESP of +1.32% and a Zacks Rank of 2. KMB is anticipated to register declines in its top and bottom lines when it reports second-quarter 2025 results. The Zacks Consensus Estimate for Kimberly-Clark’s quarterly revenues is pegged at $4.9 billion, indicating a decline of 3.1% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Kimberly-Clark’s bottom line has been unchanged in the past 30 days at $1.67 per share. This implies a decline of 14.8% from the year-ago quarter’s reported figure. KMB delivered an earnings beat of 6.8%, on average, in the trailing four quarters.

Newell Brands NWL currently has an Earnings ESP of +6.28% and a Zacks Rank of 3. The company is likely to register decreases in the top and bottom lines when it reports second-quarter 2025 numbers. The Zacks Consensus Estimate for quarterly earnings per share is pegged at 24 cents, suggesting a 33.3% decline from the year-ago period’s actual. The consensus mark has been unchanged in the past 30 days.

The consensus estimate for Newell Brands’ quarterly revenues is pegged at $1.9 billion, which indicates a decline of 4.4% from the prior-year quarter’s reported number. NWL has a trailing four-quarter earnings surprise of 42.9%, on average.

Church & Dwight Co. CHD has an Earnings ESP of +0.50% and a Zacks Rank of 3 at present. CHD is likely to register top and bottom-line declines when it releases second-quarter 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.5 billion, which implies a dip of 2% from the figure in the prior-year quarter.

The consensus estimate for Church & Dwight’s bottom line has been unchanged at 85 cents per share in the past 30 days. The estimate indicates an 8.6% decline from the year-ago quarter’s actual. CHD delivered an earnings surprise of 7.3%, on average, in the trailing four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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