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(CL) - Get Colgate-Palmolive Company Report

, the world leader in oral care, is expected to release its first quarter 2011 earnings on Thursday.

Here are two key trends that investors should keep an eye on: how margins have trended over the past quarter and the outlook for market share. Colgate competes with other leading personal care companies such as

Procter & Gamble

(PG) - Get Procter & Gamble Company Report



(UL) - Get Unilever PLC Sponsored ADR Report



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We value Colgate-Palmolive stock with a $88.80 price estimate, a roughly 10% premium to market price.

In addition to oral care products, Colgate-Palmolive makes personal care and home care products like soaps, shampoos, and fabric conditioners.

Colgate-Palmolive closed 2010 with 3% volume growth with flat pricing. The company stood still on pricing while other leading players such as P&G and Unilever withdrew promotions and actually raised prices to combat rising input costs.

While a volume-driven growth strategy might put Colgate at an advantage in the lower-income but high-growth emerging markets, we fear that persistent inflation could erode profit margins. Since we haven't seen price increases in the past quarter, much rests on maintaining operating expenses to sustain EBITDA margins.

You can drag the trend line in the interactive chart below to see the impact of various EBITDA margin scenarios on Colgate-Palmolive's stock value.

Should Colgate-Palmolive choose to maintain its volume-driven growth strategy, it must realize significant market share gains to offset lower profit margins. It is important to note that a single quarter is too short to comment on the outcome of this strategy, and investors should look at the trend emerging over the past few quarters to gain a more complete picture.

Investors should also be looking at restructuring costs and integration expenses. On March 23, Colgate-Palmolive agreed to buy Unilever's Sanex brand of personal care products for roughly $954 million and sell its laundry detergent business in Colombia to Unilever for $215 million. While the deal promises to strengthen Colgate's personal care business in Europe, we're keeping a watch on the merger-related expenses and the post-merger integration costs yet to be incurred.

See our complete analysis of Colgate-Palmolive's stock



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