CL - Colgate-Palmolive: Three Items To Look For In The Upcoming Earnings

2024-07-10 04:19:32 ET

Summary

• Colgate-Palmolive Q2 earnings expectations: asset turnover improvement, margin growth in Hill's Pet Nutrition, balance sheet deleveraging.
• Asset turnover ratio has improved since the 2019 Filorga acquisition, with sales growth in key regions.
• Profit margins have shown improvement. We'd like to see further operating margin expansion in Hill's Pet Nutrition.
• The improvement in the balance sheet, profit margins, and asset turnover point to an increasing return on equity which could justify an upgrade to a buy in the future.

Introduction

Colgate-Palmolive ( CL ) is set to announce Q2 earnings at the end of this month and there are three things that we are looking for in the report. Firstly, we would like to see continued improvement in the asset turnover ratio. An improvement in the ratio speaks to the strength of the brands and supports the continued investment in brand equity. Second, we would like to see improvement in margins, particularly in the Hill's Pet Nutrition segment. While sales have been growing at a good clip for the segment, we would like to see it matched with an expansion of the operating margin. Finally, we would like to see a further deleveraging of the balance sheet, which would position the company favorably should acquisitive opportunities arise....

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