Colgate-Palmolive Co. Earnings: Margins Shrink Again, but Net Income Climbs

S&P 500 (NYSE:SPY) component Colgate-Palmolive Co. (NYSE:CL) reported its results for the first quarter. Colgate Palmolive manufactures and markets a number of oral, personal, home care, and pet nutrition products for customers around the world.

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Colgate-Palmolive Earnings Cheat Sheet for the First Quarter

Results: Net income for Colgate-Palmolive Co. rose to $593 million ($1.23 per share) vs. $576 million ($1.16 per share) in the same quarter a year earlier. This marks a rise of 3% from the year-earlier quarter.

Revenue: Rose 5.2% to $4.2 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Colgate-Palmolive Co. reported adjusted net income of $1.24 per share. By that measure, the company fell in line with the mean estimate of $1.24 per share. Analysts were expecting revenue of $4.18 billion.

Quoting Management: Ian Cook, Chairman, President and Chief Executive Officer, commented on the results and outlook excluding the 2012 items noted above, “We are very pleased to begin the year with strong top and bottom line growth, building on the growth momentum we saw in 2011.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.3 percentage point to 58% from the year-earlier quarter. In that span, margins have contracted an average of 1.5 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 4.9% to $4.17 billion in the fourth quarter of the last fiscal year. The figure rose 11.2% in the third quarter of the last fiscal year from the year earlier and climbed 9.7% in the second quarter of the last fiscal year from the year-ago quarter.

The company met estimates last quarter after topping forecasts in the previous quarter with net income of $1.30 versus a mean estimate of net income of $1.29 per share.

Net income has increased 13.2% year-over-year on average across the last five quarters. The biggest gain came in the first quarter of the last fiscal year, when income climbed 61.3% from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is $1.34 per share, down from $1.36 ninety days ago. At $5.39 per share, the average estimate for the fiscal year has fallen from $5.48 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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