Colgate-Palmolive catches upgrade from Raymond James after earnings impress

Colgate-Palmolive Company (NYSE:CL) tracked higher in early trading on Monday after Raymond James upgraded the household products stock to an Outperform rating from Market Perform.

Analyst Olivia Tong weighed in favorably on Colgate-Palmolive (CL) following the company's Q4 earnings report and guidance update. The new guidance was seen leaving plenty of room for upside earnings revisions as the year plays out.

Tong noted that volume has flattened for CL, raw material pressures ex-FX have abated, and cost improvements have been material. Those factors are noted to have helped CL invest more substantially in advertising and overall brand support.

"In our view, CL is still in the early innings of improved top and bottom-line growth, balancing contribution from volume vs. price, emerging markets vs. developed, and across the product portfolio."

Raymond James expects CL to drive sales higher ahead of long-term targets, with a steadier pace on innovation, continued premiumization in Oral Care, and opportunity for increased category penetration for Hill’s countering decelerating pet category growth.

In terms of valuation, Colgate-Palmolive (CL) is noted to currently trade at 24X the firm's 2024 EPS estimate of $3.46, which is in-line with 5-year and 10-year historical averages.

Shares of Colgate-Palmolive Company (CL) were up 0.35% in premarket trading to $83.12 vs. the 52-week range of $67.62 to $83.62. The dividend yield for new buyers of CL is 2.32%. The Seeking Alpha Quant Rating on CL is at Hold, with a strong quant factor grade for profitability offset by a low mark for valuation.