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Church & Dwight Likely to Keep Gaining on Solid Sales Trend

Zacks Equity Research

Church & Dwight Co., Inc.’s CHD shares have surged 39.2% in the past year compared with the industry’s growth of 27%. Factors driving its robust sales trend have been conducive to this Zacks Rank #2 (Buy) company's performance. These upsides were also noted in Church & Dwight’s recently-reported quarterly results, which marked its eighth consecutive quarter of sales surprise.


Let’s delve deeper.



Impressive Sales Trend

Church & Dwight’s second-quarter sales gained from continued category growth and healthy market share gains. Markedly, the company witnessed improvements in 13 of 15 domestic categories. Also, Church & Dwight has been witnessing organic sales growth for quite some time now, backed by its solid focus on product innovation. Organic sales grew 4.9% in the second quarter of 2019, following 4.5% growth in the first quarter. In the second quarter, organic sales were fueled by a rise in global consumer products, improved volumes and product mix, and a positive impact from pricing.

Consumer International Unit a Major Driver

The company’s consumer international business has been consistently contributing to organic sales growth. In second-quarter 2019, organic sales in this segment grew 9.1% on higher volumes, and favorable price and product mix. Overall consumer international sales also remained strong, rising 6% to $186.6 million, backed by broad-based sales growth for household and personal care products, and improvement in the Global Markets Group business. As the international arena is a bright spot for the company, it continues to invest in this segment to sustain strong sales growth.

Buyouts Bode Well

Church & Dwight has acquired several premium brands, which have been contributing significantly to top-line growth. The company recently concluded the buyouts of FLAWLESS and FINISHING TOUCH (”FLAWLESS”), which is a significant inclusion to the specialty haircare category. Markedly, FLAWLESS sales are expected to increase at least 15% on an annual basis, and contribute to the company’s domestic and international long-term growth. Some of the previous noteworthy acquisitions of the company include Waterpik, Agro BioSciences and the VIVISCAL business, among others.

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

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

Church & Dwight Co., Inc. price-consensus-eps-surprise-chart | Church & Dwight Co., Inc. Quote

Encouraging Outlook

Management is encouraged by the company’s performance so far in 2019. Further, it is on track with product launches and brand investments to drive market share. It has also announced launches under the household products and personal care portfolio. These are likely to drive revenues in the forthcoming periods. The company now anticipates 2019 sales growth of 6% compared with the earlier projection of 5-6%. Organic sales are expected to rise 4%, indicating an increase from the earlier view of 3.5% growth.

3 More Stocks to Watch

Colgate CL, with a Zacks Rank #2, has a long-term EPS growth rate of 5.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Procter & Gamble PG, also with a Zacks Rank #2, has a long-term EPS growth rate of 7.1%.

Mondelez International MDLZ, with a Zacks Rank #2, has a long-term EPS growth rate of 7.7%.

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