Is This Safe-Haven Stock Overvalued? The Hidden Risk Facing Colgate-Palmolive on Oct. 30
Colgate-Palmolive heads into earnings with a 21% rally behind it, a demanding valuation, and a North American business that has shrunk for four straight quarters. Something has to give, and Friday's report may reveal whether the safe-haven story still holds.
Colgate-Palmolive (NYSE:CL | CL Price Prediction) reports third-quarter results on Friday, Oct. 30. The stock has rose 21.87% year to date. That rally puts a premium price on a business that is still struggling to grow in the U.S.
Strong Beats, a Weak Home Market and a Rich Multiple
Last quarter, Colgate posted Base Business EPS of $0.99, beating the $0.95 consensus, on revenue of $5.36B (+4.9% YoY). Gross margin expanded 140 bps to 61.5% even as advertising rose 15% to $777M. Management raised its Base Business EPS growth outlook to mid-single digits and lifted gross margin guidance to roughly flat.
North America was the problem. Net sales fell 3.0%, the fourth straight quarterly decline, with volume down 3.9%. Shares slid 1.56% the day after the report despite the beat.
Momentum has since returned. CL gained 10.05% over the past month and trades around 24x the full-year 2026 EPS consensus. That is a demanding multiple for a company guiding to 1% to 4% organic growth.
Wall Street Expects Modest Q3 Growth
| Metric | Consensus | Year-Ago Actual | Implied YoY Growth |
|---|---|---|---|
| Q3 2026 EPS | $0.9253 | $0.91 | 1.7% |
| Q3 2026 Revenue | $5.33B | $5.13B | 4.0% |
| FY 2026 EPS | $3.8668 | $3.69 | 4.8% |
| FY 2026 Revenue | $21.40B | $20.38B | 5.0% |
Colgate has beaten EPS estimates six straight quarters.
U.S. Recovery and Oil Costs Will Test the Premium
North America is my first focus. On the Q2 call, management said consumption was about flat while shipments fell 3% as retailers cut inventory and Colgate lost some share. Management promised “surgical actions by category and channel”, more advertising and fixes to select price spreads, but warned it “won’t be a linear improvement.”
Margins are the hidden risk. Management called Q3 largely locked in but expected cost of goods and tariffs to peak in the back half, highlighting Q4 risk with oil “more in the $90 range.” WTI crude hit $107.89 per barrel on Oct. 20. You should listen closely for any change to the fourth-quarter gross margin outlook.
Mix matters too. Management expects a more volume-driven second half after pricing carried the first half, and it does not expect the same Latin American FX benefit. Hill’s faces a about flat U.S. pet category plus a 200 basis point volume drag from private label exits.
Analysts are already reducing. The FY2026 EPS consensus saw three downward revisions and zero upward revisions over the past 30 days.
A Defensive Premium Now Requires U.S. Proof
Colgate’s 63 consecutive years of dividend increases and its 41.3% global toothpaste share explain why investors treat it as a safe haven. At about 24x earnings, the stock prices in steady execution. If the U.S. shows sequential improvement and margin guidance holds against higher oil, the premium looks earned. If costs rose while North America keeps contracting, this earnings report could expose how much of the rally rests on reputation.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
