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Church & Dwight (CHD) Up More Than 15% YTD: Will It Stay?
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Consumer-friendly innovation and favorable consumption demand have favored Church & Dwight Co., Inc. (CHD - Free Report) . The well-known specialty products company is on track with incremental pricing across its portfolio to counter rising costs. CHD is on track with strategic acquisitions to fuel growth.
Church & Dwight expects sales and gross margin strength to be sustained 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% and adjusted earnings per share (EPS) increase of 6%. CHD’s stock has gained 19.1% year-to-date compared with the industry’s 1.5% growth.
Let’s delve deeper.
Image Source: Zacks Investment Research
Brand Strength & Buyouts Fuel Growth
Church & Dwight boasts power brands, representing most of its consumer sales. In the second quarter of 2023, the company’s U.S. portfolio saw consumption growth in 11 of 17 categories. CHD is focused on product innovation for further development. Management is on track to differentiate its brands to consumers through innovative products, packaging and forms.
The company strategically increased its presence through acquisitions to grow its portfolio. It recently completed its latest buyout of the Hero Mighty Patch brand (or Hero) and other acne treatment products. In December 2021, CHD concluded the buyout of TheraBreath, a leading brand in the mouthwash category, which marks its 14th power brand.
We note that the buyouts 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.
Pricing Actions on Track
The Zacks Rank #3 (Hold) company resorted to incremental pricing across its portfolio to counter rising costs. Favorable pricing was an upside to the company’s organic sales in the second quarter of 2023. The company’s Organic sales growth was backed by a favorable product mix and pricing of 5.8%.
Is All Rosy for Church & Dwight?
Church & Dwight has witnessed increasing marketing and SG&A expenses for the past few quarters. In the second quarter, as a percentage of sales, marketing expenses rose 130 basis points (bps) to 9.1%. Adjusted SG&A expenses, as a percentage of sales, increased 60 bps to 14.2% due to increased incentive compensations.
For 2023, management expects 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.
Nevertheless, focusing on growth endeavors will likely help Church & Dwight stay in investors’ good books.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The J. M. Smucker Company (SJM - Free Report) , which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 14% on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year earnings suggests growth of 6.8% from the year-ago reported figure.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 11.4%.
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.
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Church & Dwight (CHD) Up More Than 15% YTD: Will It Stay?
Consumer-friendly innovation and favorable consumption demand have favored Church & Dwight Co., Inc. (CHD - Free Report) . The well-known specialty products company is on track with incremental pricing across its portfolio to counter rising costs. CHD is on track with strategic acquisitions to fuel growth.
Church & Dwight expects sales and gross margin strength to be sustained 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% and adjusted earnings per share (EPS) increase of 6%. CHD’s stock has gained 19.1% year-to-date compared with the industry’s 1.5% growth.
Let’s delve deeper.
Image Source: Zacks Investment Research
Brand Strength & Buyouts Fuel Growth
Church & Dwight boasts power brands, representing most of its consumer sales. In the second quarter of 2023, the company’s U.S. portfolio saw consumption growth in 11 of 17 categories. CHD is focused on product innovation for further development. Management is on track to differentiate its brands to consumers through innovative products, packaging and forms.
The company strategically increased its presence through acquisitions to grow its portfolio. It recently completed its latest buyout of the Hero Mighty Patch brand (or Hero) and other acne treatment products. In December 2021, CHD concluded the buyout of TheraBreath, a leading brand in the mouthwash category, which marks its 14th power brand.
We note that the buyouts 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.
Pricing Actions on Track
The Zacks Rank #3 (Hold) company resorted to incremental pricing across its portfolio to counter rising costs. Favorable pricing was an upside to the company’s organic sales in the second quarter of 2023. The company’s Organic sales growth was backed by a favorable product mix and pricing of 5.8%.
Is All Rosy for Church & Dwight?
Church & Dwight has witnessed increasing marketing and SG&A expenses for the past few quarters. In the second quarter, as a percentage of sales, marketing expenses rose 130 basis points (bps) to 9.1%. Adjusted SG&A expenses, as a percentage of sales, increased 60 bps to 14.2% due to increased incentive compensations.
For 2023, management expects 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.
Nevertheless, focusing on growth endeavors will likely help Church & Dwight stay in investors’ good books.
Some Solid Staple Bets
Flowers Foods (FLO - Free Report) emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 2.3%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The J. M. Smucker Company (SJM - Free Report) , which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 14% on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year earnings suggests growth of 6.8% from the year-ago reported figure.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 11.4%.
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.