Colgate-Palmolive (CL) Stock Sees Revenue Strength Clash With Margin Strain

Colgate-Palmolive walked into this earnings season with a stock that has barely moved over the past quarter. The share price eased only 0.3% today to US$91.30, which tells you traders saw little reason to rip up their models. The headline is quieter on the price screen than in the financials. Profitability has been under pressure, with net margin for the past year at 10% compared with 14.5% the year before, and a US$1.1b one off loss still hanging over the story. The real question now is how much you trust the longer term earnings path.

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Q2 2026 Earnings Summary

• Revenue Q1 2026 vs. Q1 2025: US$5,324m vs. US$4,911m (revenue higher year on year)
• Net Income Q1 2026 vs. Q1 2025: US$646m vs. US$690m (net income slightly lower year on year)
• Basic EPS Q1 2026 vs. Q1 2025: US$0.81 vs. US$0.85 (earnings per share slightly lower year on year)
• Net Margin Trailing 12 Months vs. Prior Year: 10% vs. 14.5% (profitability under pressure with a lower net margin)

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Colgate-Palmolive bull case: premium and pet holding up

Bulls argue Colgate-Palmolive can compound on premium oral care, Hill’s pet nutrition and emerging markets while keeping margins resilient through productivity and AI. Q2 plays to that script in several areas. Net sales of US$5.4b were up mid single digit, with organic growth across 4 of 5 divisions and strong contributions from India, Brazil, Mexico and China. Hill’s again grew ahead of its categories with healthy margins, helped by pricing and richer mix, and management is comfortable funding double digit advertising while keeping full year EPS guidance intact. Gross margin expanded about 100 bps and full year gross margin guidance was raised to roughly flat, which supports the productivity and revenue growth management story. Free cash flow improved 18% in the first half and US$1.4b was returned to shareholders, which fits the capital return plus reinvestment narrative.

Bear case: margin pressure and U.S. softness not resolved

Bears focus on earnings pressure, a weaker U.S. business and rising input costs that could cap the long term upside. The trailing 12 month net margin at 10% versus 14.5% the year before and the US$1.1b one off loss keep that concern alive, even with Q2 gross margin up 100 bps. Management is now flagging roughly US$300m of extra raw material and logistics costs for 2026 and expects cost of goods and tariffs to peak later in the year, so the upgrade to roughly flat gross margin is guarded. U.S. performance was soft again, with shipment pressure and heavier competition, and retailers are still reducing inventory. That undercuts the idea that premiumization alone quickly fixes developed market pressure. The recent share price, which is roughly flat over 30 days, also suggests investors are not treating this print as a clean win over the bear arguments.

Reveal where the consensus models for Colgate-Palmolive start to diverge from the current share price, and which year analysts quietly flag as the next real earnings test, by accessing the analyst estimates for Colgate-Palmolive.

Take Control of Your Next Move

If Colgate-Palmolive's mix of resilient revenue, margin pressure and that US$1.1b one off loss has your attention, register for free with Simply Wall St and add it to a Watchlist to track price against fair value and watch for a more attractive entry point. After you decide to buy or sell, keep your decisions grounded with a Portfolio Command Center that cuts through noise and highlights only the key updates that matter to your holdings. For a broader view on what other investors are seeing in Colgate-Palmolive and similar stocks, tap into the Community and compare different theses. This combination helps you identify potential catalysts or risks early and stay informed about market developments.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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