Colgate-Palmolive Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Colgate-Palmolive (NYSE: CL  ) . The consumer-goods maker has benefited from consistent demand for its products despite tough economic times, but headwinds from high raw-material prices have been a constant threat to profit growth. Let's take an early look at what's been happening with Colgate-Palmolive over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Colgate-Palmolive

Analyst EPS Estimate	$1.40
Change from Year-Ago EPS	7.7%
Revenue Estimate	$4.31 billion
Change From Year-Ago Revenue	3.4%
Earnings Beats in Past 4 Quarters	1

Source: Yahoo! Finance.

Can Colgate-Palmolive keep cleaning up?
Colgate-Palmolive has hit the analyst-estimate mark right on the button in each of the three past quarters, and analysts have felt pretty confident about their guess this time around, boosting it by just a single penny in the past three months. The stock, though, has made shareholders quite happy, hitting a new all-time high yesterday and rising about 6% since late October.

Colgate has taken full advantage of some recent miscues by Procter & Gamble (NYSE: PG  ) , which has largely pulled back from focusing on the massive international exposure it has built over the years. Colgate has made Latin America its biggest market, and with high margins and returns on invested capital, Colgate has succeeded where some of its peers have failed.

But Colgate's success has come at a cost. With revenue having taken a hit due to global economic pressures, Colgate announced in late October that it would lay off about 2,300 workers, or 6% of its global workforce. Meanwhile, along with Colgate and P&G, Unilever (NYSE: UL  ) and Kimberly-Clark (NYSE: KMB  ) have all had to deal with rising costs of many of the key ingredients that go into their consumer products, which have hampered margins. Colgate's wide margins shine in this situation as they give the company more room to maneuver than Unilever and Kimberly-Clark, but it's still potentially negative for the business as a whole.

With Colgate's stock at high levels, it'd be ideal for the company to give investors something more than just analyst-matching results. As the global economy recovers, Colgate needs to show that it can grow along with the world's markets.

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