I'll research CL (Colgate-Palmolive) before writing the preview. Let me gather recent earnings materials, guidance, and news.Let me read the most recent earnings call and release, plus check for recent news and analyst activity.Let me get the stock price trend and check the Q4 2025 call for original guidance context.I have strong fundamentals. Let me quickly check for recent news/analyst positioning to round out the preview.Let me pull the year-ago Q2 2025 numbers to establish the comparison base.I now have everything I need. Here's the earnings preview.
CL heads into Q2 as a "beat-and-hold" defensive that has quietly re-rated ~18% YTD (from ~$78 in early January to ~$92). The debate is no longer about the top line — organic growth has re-accelerated and FX has flipped from a headwind to a tailwind — but about gross margin, which management cut to "down for the year" on its last call. Q2 is the quarter where that raw-material/tariff pressure hits hardest, so the print is really a test of whether pricing, RGM and productivity can protect the EPS algorithm.
| Metric (Q2 2025 actual) | Value |
|---|---|
| Net sales | $5,110M (+1.0% reported, +1.8% organic) |
| Base Business EPS | $0.92 (+1% YoY) |
| GAAP EPS | $0.91 |
| Base gross margin | 60.1% (−70 bps YoY) |
| Base operating margin | 21.3% |
| Advertising | $678M |
Framing for Q2 2026: Full-year guidance calls for low-to-mid-single-digit base EPS growth and 1–4% organic sales growth. Q1 base EPS grew +7% to $0.97. Against a $0.92 year-ago base, a mid-single-digit quarter implies roughly $0.96–$0.98 base EPS, with net sales likely $5.3–5.4B aided by a swing to positive FX. The bar is "in line with the algorithm" — the market will react to margin trajectory and any guidance change, not the headline EPS.
This is the swing factor. On the Q1 call (May 1), CL cut its full-year gross-margin outlook to "down" (from "up" previously) while maintaining EPS guidance. CFO Stan Sutula quantified an incremental ~$300M of raw material + logistics costs since the Q4 call (~2/3 raws, 1/3 logistics), built on an oil assumption of ~$110/bbl for the balance of the year, with oil-derivative inputs (resins, petrochemicals, fats & oils) expected up >20% and logistics up ~10%. - Q1 base GM held up better than feared at 60.6% (−20 bps). The year-ago Q2 base GM was 60.1%, so the comp is easier than Q1's, but Q2/Q3 is when the inflation wave lands. - Watch: magnitude of YoY GM decline, and whether oil has moved off the $110 planning assumption (a potential tailwind if it's lower). Also note logistics flows through SG&A, not COGS.
NA remains the clear soft spot: organic sales −2.2% in Q1 (volume −3.2%) and operating profit −28% with margin down 590 bps (tariffs land disproportionately here, plus raws). Management explicitly guided to sequential improvement in Q2, citing late shelf resets and delayed innovation shipments in Q1 that were beginning to ship as the quarter closed, plus a full "strategy reset" (innovation, RGM, promo strategy with key retailers). - Watch: Did NA volume/organic actually inflect positive (or at least improve meaningfully)? And did the NA margin drag narrow as the tariff comp normalizes? This is the single biggest source of potential upside/disappointment on the top line.
The growth engine. In Q1, emerging markets grew +6.2% organic, with Latin America +5.4%, EMEA +3.5%, and Asia Pacific +5.6% (led by China and India). Management sounded confident this continues, driven by innovation across price tiers and strong advertising. Crucially, FX has flipped positive — it added +5.1% to reported Q1 sales and guidance now embeds a low-single-digit positive FX impact for the year (vs. a headwind in 2025). - China: Hawley & Hazel (Darlie) interventions are working but "not out of the woods"; the core Colgate brand grew mid-single digits in a flat/declining market. - India: flagged as a driver; watch for any GST-related benefit color. - Watch: whether emerging-market volume strength is sustained and whether pricing/volume stays balanced.
Hill's grew +2.1% organic in Q1 (or +4.8% ex-private-label, US +5%) against a roughly flat category, gaining share. The self-inflicted private-label exit was a ~260 bps drag on the Hill's segment in Q1; management guided it to only 20–30 bps of total-company drag in Q2, then gone in H2. Prime100 (acquisition) added ~0.4% to total-company volume. - Watch: underlying (ex-PL) momentum, Science/Prescription Diet strength, and whether the weak "dry dog" segment stabilizes. Margins here have been a bright spot.
Alongside Q1, the board expanded the Strategic Growth & Productivity Program: cumulative pre-tax charges now $350–550M (up from $200–300M) and projected annualized savings of $200–300M, with the bulk landing in 2027–2028 and completion still targeted by year-end 2028. Management repeatedly framed this — plus RGM, funding-the-growth and regular productivity — as the "flexibility" to defend EPS despite the margin hit. - Watch: the size of the Q2 restructuring charge (GAAP vs. base EPS gap; it was $0.17/sh in Q1), and any signal that savings are being pulled forward to offset inflation.
Current full-year 2026 framework (reaffirmed at Q1 except the margin line): - Net sales +2% to +6% (incl. low-single-digit FX benefit) - Organic sales +1% to +4% - Gross margin down (revised from "up") - Advertising up in dollars and as a % of sales - Base EPS low-to-mid-single-digit growth (GAAP: double-digit growth)
Key question: With oil/commodities volatile and a strong Q1 + Q2 FX tailwind, does CL maintain, narrow, or nudge up the sales/EPS ranges? On Q1, Bonnie Herzog (Goldman) pointedly asked whether EPS lands at/below the midpoint — management stayed committed to the range but told analysts to "reflect the lower gross margin in your algorithm." Any tone shift on the consumer or on incremental pricing plans will move the stock.
Expect CL to deliver another in-line-to-modestly-above EPS quarter (~$0.96–$0.98 base) on re-accelerating organic growth and an FX tailwind. The report hinges on three tension points: (1) how ugly the gross-margin decline looks as commodity inflation peaks, (2) whether North America finally shows the promised sequential inflection, and (3) whether management holds — or tweaks — full-year guidance. Given a stock that has already re-rated ~18% YTD to ~24x, the market will be less forgiving of top-line disappointment and laser-focused on management's confidence in defending the EPS algorithm through productivity and pricing.
Sources: CL Q2 2025, Q4 2025 and Q1 2026 earnings releases and Q1 2026 earnings call transcript; daily stock-price history. Any per-share/growth figures I describe as "implied" are my own framing off company guidance, not company-issued or consensus estimates.