Back to top

Image: Bigstock

Church & Dwight (CHD) Boosts Portfolio With ZICAM Brand

Read MoreHide Full Article

Church & Dwight Co., Inc. (CHD - Free Report) recently informed about the buyout of Matrixx Initiatives, Inc. for $530 million. Matrixx Initiatives is the owner of the ZICAM brand, which is the #1 zinc supplement across the United States in the VMS (vitamins, minerals and supplements) cold-reducing category.

ZICAM, which is an asset-light and flourishing brand, reduces cough/cold duration with the help of zinc as a key active ingredient. The addition of the ZICAM brand reinforces Church & Dwight’s existing portfolio and fits its long-standing buyout criteria. This buyout is likely to prove accretive to gross margin and will add nearly 3% to its cash earnings in 2021. However, the acquisition will remain neutral to earnings per share in fourth-quarter 2020 and in 2021 owing to intangible amortization, interest and transition expenses as well as increased marketing expenditure.

Encouragingly, the ZICAM brand’s net sales and EBITDA are likely to be about $90 million and $36 million, respectively, in 2021. After the complete integration of ZICAM, Church & Dwight anticipates leveraging its distribution network, operating control, and support functions, to deliver estimated annual cost savings of nearly $5 million by 2022.

Notably, the addition of the ZICAM brand represents the company’s 13th power brand. The company boasts power brands, including ARM & HAMMER, Trojan, OxiClean, Spinbrush, First Response, Nair, Orajel, Xtra, L’IL CRITTERS and VITAFUSION, WATERPIK, FLAWLESS and Batiste, which represents majority of its consumer sales.
 
We note that Church & Dwight has a long history of acquisitions. The company, which started with only one brand, i.e. ARM & HAMMER, has taken over a number of significant brands over time which has been contributing considerably to its top line. In this regard, the buyout of FLAWLESS has been a prudent addition to Church & Dwight’s portfolio. The brand is poised to keep gaining from rising at-home grooming trends. Further, in another release, Church & Dwight’s beauty label Finishing Touch Flawless revealed renowned actor and activist, Halle Berry, as a collaborative partner. This is likely to bolster the brand’s presence.

Impressively, the Zacks Rank #3 (Hold) company’s shares have appreciated 26.3% so far this year compared with the industry’s growth of 28%.

Check These Solid Consumer Staple Stocks

United Natural Foods (UNFI - Free Report) has an average trailing four-quarter earnings surprise of 4.8% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hain Celestial (HAIN - Free Report) has an average trailing four-quarter earnings surprise of 24.6% and a Zacks Rank #2 (Buy).

Lamb Weston Holdings (LW - Free Report) has a long-term earnings growth rate of 7% and a Zacks Rank #2.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year

Free: See Our Top Stock and 4 Runners Up >>

Published in