Colgate-Palmolive Co. (NYSE:CL) reported fourth-quarter financial results that presented a complex picture for investors, marked by a significant non-cash impairment charge that overshadowed underlying operational progress. The market's initial reaction, reflected in pre-market trading, suggests investors are weighing these mixed signals.
Headline Results vs. Estimates
The consumer goods giant posted sales and adjusted earnings that narrowly surpassed Wall Street's expectations for the quarter.
- Revenue: Reported net sales of $5.23 billion, a 5.8% increase year-over-year. This figure slightly exceeded the analyst consensus estimate of approximately $5.27 billion.
- Earnings Per Share (Non-GAAP): The company's "Base Business" EPS, which excludes certain one-time items, came in at $0.95. This was 4% higher than the $0.91 reported a year ago and edged past the average analyst estimate of $0.9395.
However, the GAAP (Generally Accepted Accounting Principles) results tell a different story due to a substantial one-time charge.
- GAAP EPS: The company reported a loss of $0.05 per share for the quarter, a stark decline from a $0.90 profit in the prior year. This was driven by a non-cash, after-tax impairment charge of $794 million related to goodwill and intangible assets in its skin health business, primarily the Filorga brand.
Market Reaction and Price Action
Following the earnings release, shares of Colgate-Palmolive (NYSE:CL) moved higher in pre-market trading, indicating a positive initial reception. This suggests that investors are looking past the large, non-cash impairment and focusing on the company's ability to beat core profit expectations and maintain its sales growth trajectory. The stock's performance over the past month had been positive, and the earnings beat appears to be reinforcing that trend.
Key Takeaways from the Earnings Release
Beyond the headline numbers, several critical operational and strategic points emerged from the report:
- Underlying Business Health: Management emphasized the resilience of its core business. Organic sales, which strip out the effects of foreign exchange, acquisitions, and divestments, grew 2.2% for the quarter and 1.4% for the full year.
- Skin Health Impairment: The significant write-down in the skin health segment reflects "lower than expected category growth rates and weaker than expected performance, particularly in China." The company stated it is taking actions to improve performance but has lowered its outlook for this business.
- Strong Cash Generation: The company highlighted a record $4.198 billion in net cash from operations for the full year and noted it returned $2.9 billion to shareholders through dividends and share repurchases.
- Geographic Performance: Growth was uneven across regions. Latin America saw a strong net sales increase of 12.8%, aided by foreign exchange, while North America experienced a 1.5% decline. The Europe and Africa/Eurasia divisions posted double-digit net sales growth.
- 2026 Guidance: Colgate-Palmolive provided full-year 2026 guidance, expecting:
- Net sales growth of 2% to 6%.
- Organic sales growth of 1% to 4%.
- On a non-GAAP basis, low to mid-single-digit EPS growth.
Forward Outlook vs. Analyst Expectations
The company's sales guidance for 2026, which includes a low-single-digit benefit from foreign exchange, sets a target that analysts will now measure against. The provided analyst estimate for full-year 2026 sales is approximately $21.6 billion. Colgate's projected range, based on 2025's $20.38 billion in sales, implies a 2026 target between roughly $20.79 billion and $21.60 billion, making the high end of its guidance consistent with current analyst expectations.
For more detailed historical earnings data and future analyst estimates, you can review the information available on Chartmill's CL earnings and estimates page.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. The analysis is based on publicly available data and should not be construed as a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
