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Church & Dwight (CHD) Rides on Business Strength Amid Risks
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Church & Dwight Co., Inc. (CHD - Free Report) is poised to benefit from strength across its businesses, product innovations, acquisitions and shareholder-friendly policies. However, the company has been subject to rising operating costs and expenses amid a high inflationary environment.
This Zacks Rank #3 (Hold) company has a market capitalization of $23.3 billion. In the past three months, it has gained 10.6% compared with the industry’s increase of 2.5%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors Favoring Church & Dwight
Church & Dwight has been benefiting from a strong demand environment for its products and improved case fill. For instance, in first-quarter 2023, the company registered net sales of $1,429.8 million, which increased 10.2% on a year-over-year basis. It witnessed market share gains in 8 out of 14 power brands in the domestic business. CHD’s U.S. portfolio saw consumption growth in 12 of 17 categories in the first quarter. Global online sales, as a percentage of total sales, also increased to 16.3% in the quarter. For 2023, management expects reported sales growth of about 6-7%, with organic sales growth of roughly 3-4%.
The company believes in strengthening its businesses by adding assets. Church & Dwight’s impressive brand portfolio and innovation are supporting its growth. Some notable buyouts made by the company include the acquisitions of Hero Mighty Patch (HERO) and THERABREATH. These acquisitions experienced double-digit consumption growth and market share gains in the first quarter.
CHD remains focused on product innovation for further growth. The company is launching ARM & HAMMER Hardball to enable it to capture a greater share of the lightweight litter category. Another notable launch is THERABREATH’s 3 new fluoride mouthwashes. The company also announced the launch of Micropoint for Blemishes XL patches under the HERO brand on its Mighty Patch products’ success.
Church & Dwight believes in rewarding shareholders handsomely through dividend payouts. In the first quarter, it paid out dividends worth $66.3 million, higher than $63.7 million in the year-ago period. Also, in February 2023, the company hiked the quarterly dividend rate by 4%. Healthy cash flow is likely to support returning more value to shareholders in the quarters ahead.
Factors Affecting the Company
CHD is witnessing the adverse impacts of escalating costs and operating expenses. For instance, in the first quarter, its cost of sales increased 8.4% on a year-over-year basis. Also in the quarter, its selling, general and administrative expenses rose 22.3%.
For 2023, the company expects to witness an increase in marketing expenses as a percent of sales by 50 (basis points) bps from the year-ago period. It also expects a rise in the tax rate and interest expense in 2023. These are likely to impact margins and profitability in the quarters ahead.
Celsius Holdings specializes in commercializing healthier, nutritional foods, beverages and dietary supplements. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 70.4% growth, while earnings per share are expected to rise by 154% from the corresponding year-ago reported figures. The company’s earnings surprise in the last reported quarter was 81.8%.
Conagra Brands operates as a leading branded food company in North America. The Zacks Consensus Estimate for CAG’s current financial-year sales and earnings per share suggests growth of 7.1% and 17%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 13.2%, on average.
Barfresh Food manufactures and distributes ready-to-blend beverages. The company’s earnings surprise in the last reported quarter was 0%. The Zacks Consensus Estimate for BRFH’s current financial year sales suggests growth of 33.8%, while earnings are likely to grow 53.7% from the prior-year reported numbers.
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Church & Dwight (CHD) Rides on Business Strength Amid Risks
Church & Dwight Co., Inc. (CHD - Free Report) is poised to benefit from strength across its businesses, product innovations, acquisitions and shareholder-friendly policies. However, the company has been subject to rising operating costs and expenses amid a high inflationary environment.
This Zacks Rank #3 (Hold) company has a market capitalization of $23.3 billion. In the past three months, it has gained 10.6% compared with the industry’s increase of 2.5%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors Favoring Church & Dwight
Church & Dwight has been benefiting from a strong demand environment for its products and improved case fill. For instance, in first-quarter 2023, the company registered net sales of $1,429.8 million, which increased 10.2% on a year-over-year basis. It witnessed market share gains in 8 out of 14 power brands in the domestic business. CHD’s U.S. portfolio saw consumption growth in 12 of 17 categories in the first quarter. Global online sales, as a percentage of total sales, also increased to 16.3% in the quarter. For 2023, management expects reported sales growth of about 6-7%, with organic sales growth of roughly 3-4%.
The company believes in strengthening its businesses by adding assets. Church & Dwight’s impressive brand portfolio and innovation are supporting its growth. Some notable buyouts made by the company include the acquisitions of Hero Mighty Patch (HERO) and THERABREATH. These acquisitions experienced double-digit consumption growth and market share gains in the first quarter.
CHD remains focused on product innovation for further growth. The company is launching ARM & HAMMER Hardball to enable it to capture a greater share of the lightweight litter category. Another notable launch is THERABREATH’s 3 new fluoride mouthwashes. The company also announced the launch of Micropoint for Blemishes XL patches under the HERO brand on its Mighty Patch products’ success.
Church & Dwight believes in rewarding shareholders handsomely through dividend payouts. In the first quarter, it paid out dividends worth $66.3 million, higher than $63.7 million in the year-ago period. Also, in February 2023, the company hiked the quarterly dividend rate by 4%. Healthy cash flow is likely to support returning more value to shareholders in the quarters ahead.
Factors Affecting the Company
CHD is witnessing the adverse impacts of escalating costs and operating expenses. For instance, in the first quarter, its cost of sales increased 8.4% on a year-over-year basis. Also in the quarter, its selling, general and administrative expenses rose 22.3%.
For 2023, the company expects to witness an increase in marketing expenses as a percent of sales by 50 (basis points) bps from the year-ago period. It also expects a rise in the tax rate and interest expense in 2023. These are likely to impact margins and profitability in the quarters ahead.
Key Picks
Some better-ranked stocks are Celsius Holdings, Inc. (CELH - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and Barfresh Food Group, Inc. (BRFH - Free Report) . While CELH sports a Zacks Rank #1, CAG and BRFH carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Celsius Holdings specializes in commercializing healthier, nutritional foods, beverages and dietary supplements. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 70.4% growth, while earnings per share are expected to rise by 154% from the corresponding year-ago reported figures. The company’s earnings surprise in the last reported quarter was 81.8%.
Conagra Brands operates as a leading branded food company in North America. The Zacks Consensus Estimate for CAG’s current financial-year sales and earnings per share suggests growth of 7.1% and 17%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 13.2%, on average.
Barfresh Food manufactures and distributes ready-to-blend beverages. The company’s earnings surprise in the last reported quarter was 0%. The Zacks Consensus Estimate for BRFH’s current financial year sales suggests growth of 33.8%, while earnings are likely to grow 53.7% from the prior-year reported numbers.