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Colgate-Palmolive Company (CL), one of the leading global consumer product manufacturers, is scheduled to report its fourth-quarter 2011 financial results before the market opens on January 26, 2012. The current Zacks Consensus Estimate for the quarter is earnings of $1.30 a share. For the quarter under review, revenue is expected to be $4,219 million, according to the Zacks Consensus Estimate.

Third-Quarter 2011, a synopsis

Colgate-Palmolive posted earnings of $1.31 per share for third-quarter 2011, remaining in line with the Zacks Consensus Estimate. Earnings surpassed the prior-year quarter figure of $1.21 per share by 8.2%.

Global net sales increased 11.2% year over year to $4,383 million based on 2% surge in pricing and 4.5% rise in foreign exchange coupled with a 4.5% addition from global unit volume. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 5% in the quarter. Global net sales beat the Zacks Consensus Revenue Estimate of $4,374 million.

Zacks Consensus

The analyst covered by Zacks expects Colgate-Palmolive to post fourth-quarter 2011 earnings of $1.30 a share, higher than $1.24 delivered in the prior-year quarter. Currently, the Zacks Consensus Estimate ranges between earnings of $1.24 and $1.35 a share.

For fiscal 2011, the Zacks Consensus Estimate stood at $5.02 per share, higher than the previous fiscal earnings of $4.84. The current Zacks estimate ranges between $4.97 and $5.07 per share.

Agreement of Estimate

For the fourth quarter of fiscal 2011, of the 21 analysts covering the stock, 4 analysts revised their estimates downward, while none has revised in the opposite direction in the last 30 days. For full fiscal 2011, 4 analysts revised their estimates in negative direction, while 1 revised in positive direction, in the last 30 days.

In the last 7 days, 2 out of 21 analysts have revised their estimates in the negative direction for the fourth quarter as well as for fiscal 2011.

Magnitude of Estimate Revisions

Despite negative estimate revision by most of the analysts, the Zacks Consensus Estimates remained stagnant at $1.30 for the fourth quarter, over the last 7 and 30 days. However, for fiscal 2011, the Zacks Consensus Estimate contracted by a penny to $5.02 per share over the last 7 days.

Surprise History

With respect to earnings surprises, Colgate-Palmolive has met as well as topped the Zacks Consensus Estimate over the last four quarters in the range of 0.0% to 0.8%. The average remained at positive 0.8%. This suggests that Colgate-Palmolive has surpassed the Zacks Consensus Estimate by an average of 0.8% in the trailing four quarters.

Our View

We believe that, Colgate-Palmolive’s continued focus on innovation and development of new products will facilitate it in enhancing its customer base while increasing market share. Moreover, the company’s strategy of acquiring businesses with potential for generating higher top-line growth and margin will boost its future growth.

However, Colgate-Palmolive operates in an intensely competitive environment. The resurgence of archrival Procter & Gamble Company (PG) has signaled new challenges. Global competitive conditions have also intensified, and Colgate is facing strong competition in China, Russia, India, Hong Kong, Brazil and Mexico.

Currently, Colgate-Palmolivemaintains a Zacks #4 Rank, which translates into a short-term ‘Sell’ recommendation. Our long-term recommendation on the stock remains ‘Neutral’.

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Source: Colgate-Palmolive: Earnings Preview