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Church & Dwight Touches 52-Week High on Growth Momentum

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Shares of Church & Dwight Co., Inc. (CHD - Free Report) touched a new 52 week high of $53.79 on Jun 19, to close at $53.75.

We note that company’s shares have been gaining momentum for the last three months on the back of its brand portfolio, strategies and first-quarter 2017 results. Church & Dwight stock was up 7.1% compared with the Zacks categorized Soap & Cleaning Preparations industry’s gain of 3.2% in the past three months.

Notably, the industry is currently placed at top 9% (24 out of 256) of the Zacks Classified industries.This Zacks Rank #2 (Buy) stock has a Growth Score of “A” with a long-term earnings growth rate of 9.2%, which further highlights its inherent attributes.

Going forward,the stock is likely to gain momentum and is expected to overcome the hurdles efficiently to become an investor’s favorite.

Factors Driving the Stock

Church & Dwight posted first-quarter 2017 results wherein both earnings and revenues beat estimates and improved year over year. Further, productivity initiatives and the impact of higher margin acquired business led to margin expansion. (Read more: Church & Dwight Q1 Earnings & Revenues Beat Estimates).

Notably, in the last seven quarters the company’s earnings and sales have outpaced the Zacks Consensus Estimate in the fourth and the sixth quarters, respectively.

We believe that stable portfolio of value and premium products, tight management of overhead expenses along with robust sales and earnings growth help propel the stock.

On the back of a robust brand portfolio, Church & Dwight makes regular innovations and is well-positioned in the consumer product categories. In 2017, the company has announced plans to launch ARM & HAMMER CLUMP & SEAL SLIDE cat litter and ARM & HAMMER unit dose 3-in-1 POWER PAKS laundry detergent. Additionally,  the company has decided to introduce a new VITAFUSION energy variant that supports everyday energy needs and alertness.

Church & Dwight is on track to expand its market share through strategic acquisitions. The recent buyouts of Agro BioSciences, VIVISCAL business and ANUSOL and RECTINOL brands are expected to add further strength to the Church & Dwight’s sturdy portfolio and improve business. In fact, the company has a healthy cost management structure that is encouraging.

However, the company has been witnessing pricing pressures, rising commodity costs, stiff competition and weak consumer demand in many markets. The company also remains exposed to unfavorable foreign currency translations, which might hurt sales and profits.

Nevertheless, Church & Dwight remains optimistic about its future performance. Despite a competitive environment in 2017, the company expects reported and organic sales growth of approximately 3% for 2017 driven by innovations. Further, it anticipates gross margin expansion of 40 bps year over year, despite rising commodity costs and currency headwinds. Also, operating margin is estimated to improve nearly 40 bps, on adjustment for pension settlement cost and Brazil charges.

Considering all these factors, management now envisions adjusted earnings per share in 2017 to grow by 8.5%, compared with 7% improvement expected earlier. Excluding negative currency impact of 1%, the company forecasts adjusted earnings to grow 9.5% for 2017.

The company’s estimates for full-year 2017 and 2018 have moved north in the past 60 days, reflecting the positive outlook of analysts. While estimates for 2017 grew 2.1% to $1.93 per share, for 2018, the same increased 1.9% to $2.08 per share.

Church & Dwight Company, Inc. Price, Consensus and EPS Surprise

Church & Dwight Company, Inc. Price, Consensus and EPS Surprise | Church & Dwight Company, Inc. Quote

Other Stocks to Consider

Other top-ranked stocks in the broader Consumer Staples sector include Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) , Inter Parfums, Inc. (IPAR - Free Report) and Tupperware Brands Corp. (TUP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ollie's Bargain has a long-term earnings growth rate of 18.9%.

Inter Parfums and Tupperware Brands have long-term earnings growth rate of 12.3% and 12%, respectively.

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