stock is sliding Friday. The consumer-products giant posted a strong fourth quarter, but that was overshadowed by the outlook that organic growth would revert to a long-term target from a surging 2022.
Colgate (ticker: CL) earned 77 cents per share on sales of $4.6 billion, while analysts had expected earnings of 76 cents on sales of $4.59 billion, according to FactSet. The company earned $2.97 a share on sales of $17.97 billion.
Colgate expects full-year 2023 net sales growth of 2% to 5%. Wall Street had been expecting sales of $18.6 billion for 2023, an increase of 3.5%—the midrange of the company’s projection.
But Colgate put 2023 organic sales growth—which excludes the impact of currency rates, acquisitions, and divestments—at “the high end of its long-term targeted range of 3% to 5%.” That guidance is significantly less than 2022’s 7% surge, and organic sales growth was particularly strong in the fourth quarter, when it soared to 8.5%.
Colgate didn’t immediately respond to a request for comment on the outlook for organic sales growth.
CEO Noel Wallace said in the earnings release that Colgate is “continuing to fund increased investment behind innovation, advertising, and digital transformation.”
On Friday, shares of Colgate are down 5.9% to $71.10.
RBC Capital Market analyst Nik Modi maintained his Sector Perform rating on Colgate stock and his price target of $82 after the report.
He wrote in a research note that “our recent channel work would suggest incremental price increases are harder to get through given pressure on retail customers.” Modi added, “We do not believe it makes sense for Colgate to spin out Hills [Pet Nutrition] as we believe the stock’s discounted-cash-flow value equals its sum-of-the-parts value.”
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