Earnings season is in full swing, and several companies have delivered impressive results and raised their outlooks, generating positive reactions from investors. In this article, we will take a closer look at three companies – Colgate-Palmolive (CL), ServiceNow (NOW), and Coca-Cola (KO) – that exceeded expectations and saw buying pressure post-earnings.
Colgate-Palmolive: A Leader in Oral Care Hygiene
Colgate-Palmolive, a global leader in the oral care hygiene market, reported a 7.5% surprise relative to the Zacks Consensus EPS Estimate and posted revenue 2% ahead of expectations. The company showed solid growth in both earnings (16% YoY) and revenue (10% YoY).
In addition, Colgate-Palmolive improved its gross profit margin by 130 basis points to 58.5% and achieved a 39% YoY increase in operating cash flow. These factors, coupled with the third consecutive quarter of margin expansion, led the company to raise its FY23 guidance. Colgate-Palmolive now expects revenue growth in a band of 6% – 8% and double-digit EPS growth for FY23.
Investors responded positively to the news, and Colgate-Palmolive shares are now trading at their 200-day daily moving average.
ServiceNow: Automating Digital Workflows
ServiceNow provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company reported a 14.5% EPS beat and revenue modestly ahead of expectations, with YoY growth rates of 49% and 25%, respectively.
ServiceNow’s subscription revenues climbed 27% to $2.2 billion, driven by continued business momentum and an increase in the number of customers with more than $1 million in annual contract value (ACV). The company also launched its Vancouver Platform, which embedded generative AI across workflows, further enhancing its offerings.
Although ServiceNow’s forward price-to-sales ratio is considered expensive, investors have been willing to pay the premium due to the company’s strong growth prospects. Sales are expected to climb 23% in FY23 and an additional 20% in FY24.
Coca-Cola: A Refreshing Beat and Raised Guidance
Coca-Cola, the beverage titan, reported a 7% beat relative to the Zacks Consensus EPS Estimate and posted revenue 4.3% ahead of expectations. The company saw YoY growth rates of 7.3% in earnings and 8% in revenue.
Coca-Cola’s cash-generating abilities improved, with year-to-date cash flow from operations increasing by $861 million to $8.9 billion. However, the operating margin was slightly affected by currency headwinds.
Following the earnings release, Coca-Cola raised its organic revenue (non-GAAP) guidance for FY23 to a band of 10% – 11%. The stock saw a solid pop in response to the positive news.
Bottom Line
This earnings season has been positive for Colgate-Palmolive, ServiceNow, and Coca-Cola. All three companies exceeded expectations, upgraded their outlooks, and witnessed buying pressure post-earnings. Investors should keep a close eye on these companies as they continue to navigate the unique macroeconomic situation.
Disclaimer: The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.
