When Colgate-Palmolive reports third-quarter earnings on October 30, investors may find few surprises. UBS, a global investment bank, expects the consumer staples giant to deliver results that match Wall Street's estimates and to keep its full-year guidance unchanged. But the real debate, according to UBS, is not about the quarter at all—it's about whether rising costs and currency swings will put a brake on earnings growth heading into 2027.
What UBS is watching
UBS analysts believe Colgate will reiterate its existing outlook, which typically means there's little new information for analysts to plug into their near-term models. Instead, attention shifts to the next couple of years, where the bank sees two key moving parts.
The first is input costs. Like many consumer goods companies, Colgate faces higher prices for raw materials, packaging, and transportation. When those costs rise faster than the company can raise prices or cut expenses, profit margins get squeezed. The second is foreign exchange. Because Colgate sells products globally, a stronger U.S. dollar reduces the value of overseas profits when they are converted back into dollars. That can drag down reported earnings growth.
UBS says this combination could pull expectations toward the lower end of Colgate's 2026 earnings-per-share (EPS) growth range and make 2027 forecasts feel less certain. In other words, the company's long-term earnings trajectory may be more fragile than the upcoming quarter's numbers suggest.
Why 2027 matters more than Q3
For investors, the October 30 report is likely to be a non-event if guidance stays intact. The stock's price, UBS argues, will be driven more by confidence in Colgate's multi-year earnings path than by one quarter's details. The bank's price target of $106 puts the focus squarely on 2026-2027 estimates.
When costs rise and currency swings cloud results, analysts often respond in two ways: they trim future EPS assumptions, and they lower the valuation multiple—the price investors are willing to pay for each dollar of earnings—to reflect added uncertainty. That matters more when a stock already looks pricey versus its own history, because there's less cushion if the outer-year story wobbles.
Colgate's shares have historically traded at a premium to the broader market, reflecting its defensive nature and steady dividend. But if the 2027 outlook becomes murkier, that premium could shrink.
A rival as a benchmark
UBS also points to improving consumption trends at Procter & Gamble, a rival consumer staples company. P&G's demand looks steadier, which gives investors a clearer comparison point within the same defensive sector. If Colgate's 2027 visibility fades, markets may use P&G as the "cleaner" benchmark for the household-products group.
This dynamic is not unique to Colgate. Many consumer staples companies are grappling with the same inflation and currency pressures, as seen in recent earnings reports from other defensive names. For instance, Philip Morris beat estimates on strong vapor volumes, while Edenred topped expectations despite fee caps. These mixed results highlight how companies in the sector are navigating similar headwinds.
What it means for investors
For everyday investors, the key takeaway is that Colgate's near-term report may not move the needle much. Instead, the focus should be on the company's ability to sustain earnings growth over the next few years. If inflation and currency pressures persist, Colgate's EPS growth could come in at the lower end of its guided range, and 2027 forecasts could be revised down.
That doesn't mean Colgate is a bad investment—it's a stable, dividend-paying company in a defensive sector. But it does mean that the stock's valuation may be more sensitive to long-term expectations than to quarterly results. Investors should watch for any language in the earnings call about cost pressures, pricing power, and currency impacts, as those will shape the 2027 outlook.
UBS's $106 target suggests the stock has limited upside from current levels if the market starts to discount a slower growth path. As always, it's important to consider your own financial goals and risk tolerance before making any investment decisions.
