Colgate Gains 21.3% YTD: What Makes the Stock Apt to Retain?

Core Insights - Colgate-Palmolive Company has demonstrated strong performance through effective business strategies, including pricing, innovation, and productivity efforts, resulting in a year-to-date share price increase of 21.3% [1] - The company's innovation strategy focuses on premiumization in its Oral Care portfolio, with successful products like CO. by Colgate and Colgate Elixir toothpaste [2] - Colgate's organic sales grew by 6.8%, driven by strong performance in oral care, marking double-digit growth for the fourth consecutive quarter [4] Financial Performance - In Q3 2024, Colgate's adjusted gross margin expanded by 270 basis points, while the adjusted operating profit margin increased by 50 basis points year over year [5] - Management forecasts a gross profit margin expansion for 2024, expecting Base Business earnings per share (EPS) to rise by 10-11% year over year [6] - The Zacks Consensus Estimate predicts a 3.9% increase in sales and an 11.2% increase in EPS for 2024, with further growth expected in 2025 [10] Challenges - Colgate faces inflationary pressures, particularly from raw materials and packaging, which may impact profitability [7] - The company anticipates higher advertising costs in 2024, alongside a negative impact from unfavorable foreign currency fluctuations [8] Shareholder Returns - Colgate remains committed to shareholder returns through share buybacks and increased dividend payouts, raising the annualized dividend rate to $2.00 per share [9]