Option Trade
Colgate-Palmolive Company (NYSE:CL) Puts 
Thursday, January 28, 2016

**OPTION TRADE: Buy the CL Feb 2016 65.000 put (CL160219P00065000) at approximately $1.50. Place a pre-determined sell at $3.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.60.

by Ian Harvey

January 28, 2016

Colgate-Palmolive Company (NYSE: CL), a consumer products company, whose products are marketed in more than 200 countries and territories throughout the world, is set to announce its Q415 earnings results before the market opens on Friday, January 29th. Analysts expect the company to announce unadjusted earnings per share of 71 cents on $630.6 million in profit, up from 68 cents per share on profit of $628 million.

However, revenue is expected to drop to $3.93 billion from $4.22 billion in the October-December quarter of the previous year. Shares in the consumer products maker are trading around $63. They’re down 8 percent over the past 12 months and down 5 percent since the start of the year.

Colgate Palmolive Co is grappling with a strong dollar that has reduced the value of sales from overseas. Colgate, which gets about 66 percent of sales from outside North America, has raised prices in markets like Latin America and Africa to cushion the impact of the dollar. However, unit volume in these regions has reduced as an effect. The company cut its full-year profit forecast in October to reflect the changes in foreign exchange rates, which generally have a double-digit impact on total sales. Investors will look out for any updates to the forecast and whether the company has other plans to offset the impact of currency when it reports fourth quarter earnings on Friday.

Shares in the consumer products maker are trading around $65. They’re down 8 percent over the past 12 months and down 5 percent since the start of the year.

Shares of Colgate-Palmolive Company opened at 64.30 on Thursday. The stock’s 50 day moving average is $65.14 and its 200 day moving average is $65.63. Colgate-Palmolive Company has a 52-week low of $50.84 and a 52-week high of $71.56. The stock has a market capitalization of $57.67 billion and a PE ratio of 23.81.

According to Colgate's fact sheet, approximately 80% of their sales come from international operations, and in the last quarter the company stated foreign exchange hurt earnings by a whopping 13%!

If the global economy continues to slow or enter recession territory Colgate could struggle to grow sales more than 1-2% and will continue to get hammered by currency exchange effects.

The strengthening of the USD hurts Colgate's earnings and accounting statements because they have to translate sales and profits in other currencies into USD which artificially reduces their impact.

In other news, insider Jennifer Daniels sold 837 shares of the firm’s stock in a transaction dated Monday, January 11th. The shares were sold at an average price of $62.85, for a total value of $52,605.45. Also, CTO Patricia Verduin sold 3,666 shares of the firm’s stock in a transaction dated Friday, January 15th. The stock was sold at an average price of $62.37, for a total transaction of $228,648.42.

Several brokerages recently weighed in on CL. B. Riley restated a “neutral” rating and issued a $75.00 price target on shares of Colgate-Palmolive Company in a research note on Monday, November 2nd. BNP Paribas cut their price objective on Colgate-Palmolive Company to $68.00 in a research note on Monday, November 23rd. TheStreet lowered Colgate-Palmolive Company from a “buy” rating to a “hold” rating in a research note on Friday, October 30th. Canaccord Genuity reiterated a “hold” rating and set a $65.00 price objective on shares of Colgate-Palmolive Company in a research note on Friday, October 30th. Finally, Zacks Investment Research lowered Colgate-Palmolive Company from a “hold” rating to a “sell” rating in a research note on Tuesday, January 12th.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the CL Feb 2016 65.000 put (CL160219P00065000) at approximately $1.50. Place a pre-determined sell at $3.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.60.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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