Colgate-Palmolive rises as core growth offsets Filorga impairment
Consumer goods giant posts adjusted EPS beat despite $794M non-cash charge on skin health assets
Colgate-Palmolive shares rose in pre-market trading on Friday as investors looked past a headline loss to focus on stronger-than-expected underlying performance in the consumer goods giant's core oral and personal care businesses.
The company reported a GAAP loss of $0.05 per share for the fourth quarter, driven primarily by a $794 million non-cash impairment charge related to its Filorga skin health business. Stripping out one-time items, adjusted earnings per share reached $0.95, beating analyst expectations of $0.91, while revenue climbed 5.8% year-over-year to $5.23 billion, surpassing the consensus forecast of $5.12 billion.
The impairment reflects adjustments to goodwill and intangible assets within the skin health segment, primarily impacting the Filorga brand. The company cited lower-than-expected category growth and weaker performance, particularly in China's market, as factors behind the charge. Despite the setback, organic sales—which exclude currency fluctuations and acquisitions—grew 2.2% during the quarter, signaling resilience in Colgate's primary business lines.
"The core business strength outweighs the one-time charge," said analysts, noting that the adjusted performance demonstrates Colgate's ability to navigate inflationary pressures and competitive dynamics across its global portfolio.
Looking ahead to fiscal year 2026, Colgate-Palmolive forecast net sales growth of 2% to 6%, with organic sales expected to increase between 1% and 4%. The company also anticipates gross profit margin expansion on a non-GAAP basis, bolstered by moderating inflation and favorable foreign exchange trends.
Analyst sentiment has turned increasingly optimistic. Morgan Stanley named Colgate-Palmolive its top pick in the household and personal care sector for 2026, projecting that the company's sales will outpace competitors. The firm described expectations of 3% organic sales growth and 6% earnings per share growth for 2026 as "reasonable." In January, Piper Sandler upgraded Colgate to "Overweight" from "Neutral", setting an $88 price target and suggesting that management's FY2026 guidance appeared conservative and achievable.
Colgate-Palmolive, which has paid dividends since 1895, currently trades at a forward price-to-earnings ratio of 22.03, with a market capitalization of approximately $69.3 billion. The stock's 52-week range spans $74.10 to $97.77, reflecting broader volatility in consumer staples amid shifting inflation and consumer spending patterns.
The contrasting signals—a headline GAAP loss alongside strong adjusted metrics and positive analyst commentary—highlight how investors are increasingly separating transient financial impacts from fundamental business momentum. With Filorga's challenges largely behind the company, focus now shifts to whether Colgate can deliver on its growth targets in 2026 and justify rising analyst expectations.