Household Products Stocks Q3 Teardown: Colgate-Palmolive (NYSE:CL) Vs The Rest

Looking back on household products stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Procter & Gamble and its peers.

Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.

The 10 household products stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 1% above.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Procter & Gamble

Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.

Procter & Gamble reported revenues of $22.39 billion, up 3% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

“Our organic sales growth, earnings and cash results in the first quarter reflect strong execution of our integrated strategy,” said Jon Moeller, Chairman of the Board, President and Chief Executive Officer.

Unsurprisingly, the stock is down 5.3% since reporting and currently trades at $144.17.

Best Q3: Central Garden & Pet

Enhancing the lives of both pets and homeowners, Central Garden & Pet is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.

Central Garden & Pet reported revenues of $678.2 million, up 1.3% year on year, outperforming analysts’ expectations by 3.9%. The business had an exceptional quarter with a beat of analysts’ EPS and adjusted operating income estimates.

Central Garden & Pet achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 3.6% since reporting. It currently trades at $32.58.

Weakest Q3: Energizer

Masterminds behind the viral Energizer Bunny mascot, Energizer is one of the world's largest manufacturers of batteries.

Energizer reported revenues of $832.8 million, up 3.4% year on year, exceeding analysts’ expectations by 0.8%. Still, it was a softer quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly and a miss of analysts’ gross margin estimates.

As expected, the stock is down 11.5% since the results and currently trades at $21.11.

Read our full analysis of Energizer’s results here.

WD-40

Short for “Water Displacement perfected on the 40th try”, WD-40 is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.

WD-40 reported revenues of $154.4 million, flat year on year. This result was in line with analysts’ expectations. Zooming out, it was a softer quarter as it produced a significant miss of analysts’ EPS estimates and a miss of analysts’ EBITDA estimates.

The stock is down 3.4% since reporting and currently trades at $196.52.

Read our full, actionable report on WD-40 here, it’s free.

Church & Dwight

Best known for its Arm & Hammer baking soda, Church & Dwight is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.

Church & Dwight reported revenues of $1.59 billion, up 5% year on year. This print surpassed analysts’ expectations by 3.3%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

Church & Dwight pulled off the fastest revenue growth among its peers. The stock is up 7.6% since reporting and currently trades at $88.00.

Read our full, actionable report on Church & Dwight here, it’s free.

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how household products stocks fared in Q3, starting with Central Garden & Pet .

Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.

The 10 household products stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 1% above.

While some household products stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.2% since the latest earnings results.

Best Q3: Central Garden & Pet

Enhancing the lives of both pets and homeowners, Central Garden & Pet is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.

Central Garden & Pet reported revenues of $678.2 million, up 1.3% year on year. This print exceeded analysts’ expectations by 3.9%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS and adjusted operating income estimates.

"This was a record year on the bottom line, marked by continued margin expansion and disciplined execution of our Cost and Simplicity agenda," said Niko Lahanas, CEO of Central Garden & Pet.

Interestingly, the stock is up 1.7% since reporting and currently trades at $31.97.

Clorox

Founded in 1913 with bleach as the sole product offering, Clorox today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.

Clorox reported revenues of $1.43 billion, down 18.9% year on year, outperforming analysts’ expectations by 2%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 7.5% since reporting. It currently trades at $100.95.

Weakest Q3: Energizer

Masterminds behind the viral Energizer Bunny mascot, Energizer is one of the world's largest manufacturers of batteries.

Energizer reported revenues of $832.8 million, up 3.4% year on year, exceeding analysts’ expectations by 0.8%. Still, it was a softer quarter as it posted EPS guidance for next quarter missing analysts’ expectations and a miss of analysts’ gross margin estimates.

As expected, the stock is down 16.3% since the results and currently trades at $19.97.

Read our full analysis of Energizer’s results here.

Spectrum Brands

A leader in multiple consumer product categories, Spectrum Brands is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.

Spectrum Brands reported revenues of $733.5 million, down 5.2% year on year. This print missed analysts’ expectations by 1.1%. Zooming out, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a miss of analysts’ gross margin estimates.

Spectrum Brands had the weakest performance against analyst estimates among its peers. The stock is up 12.8% since reporting and currently trades at $60.04.

Read our full, actionable report on Spectrum Brands here, it’s free for active Edge members.

Reynolds

Best known for its aluminum foil, Reynolds is a household products company whose products focus on food storage, cooking, and waste.

Reynolds reported revenues of $931 million, up 2.3% year on year. This result surpassed analysts’ expectations by 3.4%. It was a strong quarter as it also logged revenue guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ organic revenue estimates.

The stock is down 2.7% since reporting and currently trades at $23.06.

Read our full, actionable report on Reynolds here, it’s free for active Edge members.

Over the past six months, Colgate-Palmolive’s shares (currently trading at $79.74) have posted a disappointing 12.3% loss, well below the S&P 500’s 11.7% gain. This might have investors contemplating their next move.

Given the weaker price action, is now a good time to buy CL? Find out in our full research report, it’s free for active Edge members.

Why Does CL Stock Spark Debate?

Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive is a consumer products company that focuses on personal, household, and pet products.

Two Positive Attributes:

1. Elite Gross Margin Powers Best-In-Class Business Model

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products, has a stronger brand, and commands pricing power.

Colgate-Palmolive has best-in-class unit economics for a consumer staples company, enabling it to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an elite 60.3% gross margin over the last two years. That means Colgate-Palmolive only paid its suppliers $39.72 for every $100 in revenue.

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Colgate-Palmolive has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 17% over the last two years.

One Reason to be Careful:

Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Colgate-Palmolive’s 4.2% annualized revenue growth over the last three years was tepid. This wasn’t a great result compared to the rest of the consumer staples sector, but there are still things to like about Colgate-Palmolive.

Final Judgment

Colgate-Palmolive’s merits more than compensate for its flaws. With the recent decline, the stock trades at 21.3× forward P/E (or $79.74 per share). Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.