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Church & Dwight (CHD) Poised on Prudent Buyouts & Innovations
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Church & Dwight Co., Inc. (CHD - Free Report) strategically increased its presence through acquisitions to grow its portfolio. The well-known specialty products company has been gaining from its solid innovation and favorable consumption demand. CHD is on track with incremental pricing across its portfolio to counter rising costs.
The upsides mentioned above were evident in its second-quarter 2023 results, as the top and the bottom line increased year over year and cruised past the Zacks Consensus Estimate. Encouragingly, management recently raised its 2023 outlook.
Let’s delve deeper.
Image Source: Zacks Investment Research
Solid Q2 Results, View
In the second quarter of 2023, Church & Dwight posted adjusted earnings of 92 cents per share, which surged 21.1% on increased sales, a better-than-expected gross margin and a reduced tax rate. Net sales of $1,454.2 million advanced 9.7%. Strength in the company’s brands and robust consumption remained upsides. Church & Dwight also benefited from buyout gains. Favorable pricing was an upside to the company’s organic sales. CHD’s organic sales growth was backed by a good product mix and pricing to the tune of 5.8%.
Church & Dwight expects sales and gross margin strength to sustain in the second half of 2023. Constant brand investments, product innovation and successful execution will likely drive results. For 2023, management expects reported sales growth of nearly 8%, up from the previous guidance of 6-7%. CHD anticipates a year-over-year adjusted earnings per share (EPS) of $3.15, which implies growth of 6% from the year-ago period quarter. Earlier, management expected 2-4% growth in adjusted EPS.
Factors Working Well For Church & Dwight
Church & Dwight has a long history of acquisitions, yielding well. The company recently completed its latest buyout of the Hero Mighty Patch brand (or Hero) and other acne treatment products. In December 2021, Church & Dwight concluded the buyout of TheraBreath, a leading brand in the mouthwash category, which marks the company's 14th power brand.
We note that the buyout of FLAWLESS and WATERPIK have also been prudent additions to Church & Dwight’s portfolio. Another noteworthy acquisition of the company includes Batiste. Also, in December 2020, the company took over Matrixx Initiatives, which owns the ZICAM brand. Church & Dwight’s recent buyouts — THERABREATH mouthwash and the HERO brand — performed exceptionally well and witnessed robust consumption and market share gains in the second quarter of 2023.
Church & Dwight boasts power brands, representing most of its consumer sales. In the second quarter, the company’s U.S. portfolio saw consumption growth in 11 of 17 categories. Church & Dwight is focused on product innovation for further development. Management is on track to differentiate its brands to consumers through innovative products, packaging and forms.
Another factor working for Church & Dwight is the online channel. The company’s global online sales, as a percentage of total sales, increased to 18% in the second quarter compared with 16.3% in the preceding quarter. For 2023, management expects pricing and productivity to counter inflationary headwinds.
Final Thoughts
Church & Dwight has witnessed increasing marketing and SG&A expenses for the past few quarters. For 2023, management expects to make considerable increases in marketing and SG&A investments. CHD expects to raise marketing, as a percentage of sales, to about 11% in 2023 (from 10.5% projected before). It expects SG&A to increase from 2022 due to incentive compensations and growth-oriented investments. These are likely to impact the adjusted EPS.
That being said, we believe that focusing on the abovementioned growth endeavors is likely to help Church & Dwight keep its growth story going.
Shares of this Zacks Rank #3 (Hold) company have increased 11.7% in the past six months compared with the industry’s growth of 7%.
Some Top-Ranked Staple Bets
Here, we have highlighted three top-ranked stocks, namely Post Holdings (POST - Free Report) , Utz Brands Inc. (UTZ - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Utz Brands, manufacturer of a diverse portfolio of salty snacks, currently has a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.
Celsius Holdings currently carries a Zacks Rank #2. CELH specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements.
The Zacks Consensus Estimate for CELH’s current financial-year sales indicates an 87.6% growth from the year-ago reported figure. The company had an earnings surprise of 100% in the last reported quarter.
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Church & Dwight (CHD) Poised on Prudent Buyouts & Innovations
Church & Dwight Co., Inc. (CHD - Free Report) strategically increased its presence through acquisitions to grow its portfolio. The well-known specialty products company has been gaining from its solid innovation and favorable consumption demand. CHD is on track with incremental pricing across its portfolio to counter rising costs.
The upsides mentioned above were evident in its second-quarter 2023 results, as the top and the bottom line increased year over year and cruised past the Zacks Consensus Estimate. Encouragingly, management recently raised its 2023 outlook.
Let’s delve deeper.
Image Source: Zacks Investment Research
Solid Q2 Results, View
In the second quarter of 2023, Church & Dwight posted adjusted earnings of 92 cents per share, which surged 21.1% on increased sales, a better-than-expected gross margin and a reduced tax rate. Net sales of $1,454.2 million advanced 9.7%. Strength in the company’s brands and robust consumption remained upsides. Church & Dwight also benefited from buyout gains. Favorable pricing was an upside to the company’s organic sales. CHD’s organic sales growth was backed by a good product mix and pricing to the tune of 5.8%.
Church & Dwight expects sales and gross margin strength to sustain in the second half of 2023. Constant brand investments, product innovation and successful execution will likely drive results. For 2023, management expects reported sales growth of nearly 8%, up from the previous guidance of 6-7%. CHD anticipates a year-over-year adjusted earnings per share (EPS) of $3.15, which implies growth of 6% from the year-ago period quarter. Earlier, management expected 2-4% growth in adjusted EPS.
Factors Working Well For Church & Dwight
Church & Dwight has a long history of acquisitions, yielding well. The company recently completed its latest buyout of the Hero Mighty Patch brand (or Hero) and other acne treatment products. In December 2021, Church & Dwight concluded the buyout of TheraBreath, a leading brand in the mouthwash category, which marks the company's 14th power brand.
We note that the buyout of FLAWLESS and WATERPIK have also been prudent additions to Church & Dwight’s portfolio. Another noteworthy acquisition of the company includes Batiste. Also, in December 2020, the company took over Matrixx Initiatives, which owns the ZICAM brand. Church & Dwight’s recent buyouts — THERABREATH mouthwash and the HERO brand — performed exceptionally well and witnessed robust consumption and market share gains in the second quarter of 2023.
Church & Dwight boasts power brands, representing most of its consumer sales. In the second quarter, the company’s U.S. portfolio saw consumption growth in 11 of 17 categories. Church & Dwight is focused on product innovation for further development. Management is on track to differentiate its brands to consumers through innovative products, packaging and forms.
Another factor working for Church & Dwight is the online channel. The company’s global online sales, as a percentage of total sales, increased to 18% in the second quarter compared with 16.3% in the preceding quarter. For 2023, management expects pricing and productivity to counter inflationary headwinds.
Final Thoughts
Church & Dwight has witnessed increasing marketing and SG&A expenses for the past few quarters. For 2023, management expects to make considerable increases in marketing and SG&A investments. CHD expects to raise marketing, as a percentage of sales, to about 11% in 2023 (from 10.5% projected before). It expects SG&A to increase from 2022 due to incentive compensations and growth-oriented investments. These are likely to impact the adjusted EPS.
That being said, we believe that focusing on the abovementioned growth endeavors is likely to help Church & Dwight keep its growth story going.
Shares of this Zacks Rank #3 (Hold) company have increased 11.7% in the past six months compared with the industry’s growth of 7%.
Some Top-Ranked Staple Bets
Here, we have highlighted three top-ranked stocks, namely Post Holdings (POST - Free Report) , Utz Brands Inc. (UTZ - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Utz Brands, manufacturer of a diverse portfolio of salty snacks, currently has a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.
Celsius Holdings currently carries a Zacks Rank #2. CELH specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements.
The Zacks Consensus Estimate for CELH’s current financial-year sales indicates an 87.6% growth from the year-ago reported figure. The company had an earnings surprise of 100% in the last reported quarter.