05 November, 2008

Colgate-Palmolive Smiles Amid the Turmoil

You'd be hard pressed to find evidence of a worldwide recession in Colgate-Palmolive  fiscal 2009 third-quarter results. Let me count the ways the company's recent results mirror pre-recession trends.It's extraordinary that the company has been able to maintain (virtually) the same momentum it had earlier in the year. 

Case volume may be slowing a tad, but it's sure nowhere near the case volume declines .Colgate-Palmolive reported global market share gains in oral care products, bar soap, dish liquids, and shampoo this quarter.Gross margin slipped a bit this quarter, as price increases did not fully cover input cost increases.At a P/E ratio of 18.8 times trailing-12-month earnings, it's hard to describe Colgate as a screaming value. On the other hand, the stock is more than 20% off its September highs. But the company covered this with tighter expense control, and it was encouraging to hear on the earnings call that recent oil price declines will translate into margin rate gains next year.