Margin Decay Again Plagues Colgate in Q4, but We Think It's Prudently Focused on the Long Term

While Colgate’s fourth-quarter marks (including a lower gross margin) sent a chill through the market (shares down at a mid-single-digit percentage clip), we posit the reaction was overdone. Organic sales jumped 8.5%, as 12.5% higher prices offset a 4% downdraft in volumes (modest, in our view, relative to the pronounced price hike). And its dominant market share in global and U.S. toothpaste held near 40% and 35%, respectively, speaking to its pristine brand standing.