Can Colgate's New Productivity Program Drive Long-Term Growth?

Colgate-Palmolive Company’s CL newly announced productivity program reflects its commitment to building a “future-fit” organization as part of its 2030 strategic plan. Even amid a challenging operating environment characterized by high raw material and packaging costs, tariffs and macroeconomic uncertainty, Colgate has continued to deliver solid growth in net sales, organic sales and earnings per share. The program targets $300–$400 million in incremental savings by 2025, designed to complement ongoing revenue growth management (RGM) and funding-the-growth initiatives, ensuring that resources are allocated efficiently while maintaining focus on long-term brand and category development.

The core strategy of the productivity program revolves around cost-saving and efficiency initiatives that strengthen Colgate’s operational foundation. These include optimizing the global supply chain for greater agility and resilience, leveraging AI and data analytics to enhance portfolio and promotional decisions, and prioritizing investments in high-return areas. By streamlining processes, improving pricing and mix strategies, and reducing overhead, Colgate aims to generate incremental savings that can either be reinvested in innovation and brand-building or applied directly to the bottom line. The program also emphasizes strategic use of price pack architecture, such as multipacks and smaller sizes, to meet evolving consumer needs while enhancing profitability.

Colgate’s productivity initiative is expected to drive long-term growth and efficiency by enabling it to navigate volatile markets while sustaining organic sales momentum. By combining cost discipline with strategic investment in core innovation, AI-driven RGM and digital capabilities, Colgate can enhance household penetration, maintain brand health and support consistent compounded earnings per share growth. If executed effectively, this program positions Colgate not only to weather near-term challenges but also to strengthen its competitive advantage and long-term profitability.

CL’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have lost 6.9% in the past three months, underperforming both the industry and the broader Consumer Staples sector, which declined 1.9% and 2%, respectively. The stock also lagged the S&P 500, which gained 11.5% in the same period.

CL Stock's Past Three Months Performance

Is CL a Value Play Stock?

Colgate currently trades at a forward 12-month P/E ratio of 21.8X, which is higher than the industry average of 20.01X and higher than the sector average of 17.02X. This valuation positions the stock at a premium relative to both its sector and industry peers, suggesting that investors may be pricing in stronger growth prospects, brand strength or operational efficiency compared with competitors.

CL P/E Ratio (Forward 12 Months)

Stocks to Consider

Post Holdings, Inc. POST operates as a consumer-packaged goods holding company in the United States and internationally. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 11%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.

The Chefs' Warehouse, Inc. CHEF distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels. 

Laird Superfood, Inc. LSF manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank #2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average. 

The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.

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

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