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Colgate-Palmolive (NYSE:CL) gave investors something to smile about Friday. The consumer-products giant reported third-quarter 2026 earnings and revenue that beat Wall Street expectations, and the stock traded higher on the news.
The company also narrowed its sales guidance range while raising profitability expectations. That is a neat trick when demand in the U.S. market is softening, but Colgate pulled it off.
Base Business EPS rose 7% to 97 cents, beating analysts' consensus estimate of 93 cents. Base Business Gross profit margin increased 90 basis points to 60.3%.
Net sales increased 4.6% to $5.369 billion, above the $5.334 billion estimate, while organic sales grew 3.6%. The organic result included a 0.2% drag from the private-label pet food non-strategic exit.
The funding-the-growth initiative added 290 basis points, favorable mix added 20 basis points and pricing contributed 80 basis points, offsetting a 300 basis point raw-material headwind.
GAAP EPS rose 3% to 94 cents, while net income increased to $751 million from $735 million.
Colgate-Palmolive reported net sales and organic sales growth in all four categories with continued balance between volume and pricing growth.
Organic volume increased 1.7%, while pricing rose 2%.
Advertising spending climbed 15% to $775 million, representing 14.4% of sales.
Management attributed the pricing growth to its revenue growth management strategies, including PromoAI, that help offset increased raw and packaging material and logistics costs.
"Despite consumer uncertainty and ongoing macroeconomic volatility, our proactive focus on driving growth while building flexibility into our P&L gives us confidence we can navigate these challenges while continuing to deliver consistent, compounded earnings per share growth and drive long-term shareholder value," Chairman, President and CEO Noel Wallace said.
Wallace said the company is focused on executing its 2030 strategy. Its priorities include premium, science-led innovation, and continued investments in brands supported by increased advertising.
He said to step up omni-channel demand generation through channels including digital, agentic and social commerce.
The company's net sales grew in four of five divisions, except North America, which improved sequentially but was impacted by continued softness in the U.S.
Latin America led with 12.5%, while Asia Pacific increased 3.5%, followed by Europe, Middle East and Africa up 1.4%.
North America sales fell 1.7%, impacted by a 3.7% decline in volumes and a 20 basis point impact from foreign exchange, offset by a 2.2% increase in pricing.
Management highlighted a challenging U.S. operating environment, citing volatile consumer spending and weak sentiment amid rising fuel prices.
Management expects the company's turnaround strategy will take time to deliver meaningful results, though it noted early signs of improvement in its U.S. toothpaste market share during the quarter. The company's value share of the U.S. toothpaste market reached 31.9% year-to-date, and its value share of the manual toothbrush market was 42.4% year-to-date.
Hill's Pet Nutrition grew 5.6%.
As of Sept. 30, cash totaled $1.53 billion, while debt stood at $7.72 billion.
The company returned $2.2 billion to shareholders through share repurchases and dividends, year-to-date through the third quarter of 2026.
Colgate, given its strong performance year-to-date, narrowed its guidance range for 2026 net sales and organic sales and raised its 2026 gross profit margin and Base Business EPS guidance.
Colgate narrowed its 2026 net sales growth outlook to 4%-5% (from 2%-6% previously), implying sales of about $21.197 billion to $21.401 billion, versus the $21.406 billion estimate.
Expects organic sales growth to be broadly in line with its nine-month performance of around 3%, versus 1% to 4% previously.
Also, the private label pet food business exit is expected to impact net and organic sales growth by around 30 basis points in 2026.
The company raised Base Business EPS growth guidance to 5%-7%, versus up mid-single digits previously, while GAAP EPS is expected to grow at a double-digit rate.
Colgate expects gross profit margin to be up year over year, versus roughly flat previously.
Management highlighted continued cost pressures from elevated raw material, packaging and logistics expenses, driven by the Middle East conflict and rising oil and commodity prices. However, the company indicated that its costs are largely locked in for the remainder of the year.
The company continues to expect a tariff impact in the remainder of the year, while advertising is expected to be up on both a dollar basis and as a percentage of net sales.
CL Price Action: Colgate-Palmolive shares were up 2.47% at $95.50 at publication on Friday. The stock is approaching its 52-week high of $99.33, according to market data.
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