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How Did Church & Dwight Perform in 2Q16?

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Price movement

Church & Dwight (CHD) has a market cap of $13.0 billion. It rose by 3.7% to close at $101.18 per share on August 4, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.7%, -0.13%, and 20.1%, respectively, on the same day. CHD is trading 1.6% above its 20-day moving average, 1.6% above its 50-day moving average, and 11.4% above its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.7% of its holdings in Church & Dwight. The ETF tracks an equal-weighted index of large-cap US consumer staples stocks drawn from the S&P 500. The YTD price movement of RHS was 9.5% on August 4.

The market caps of Church & Dwight’s competitors are as follows:

  • Procter & Gamble (PG) — $231.4 billion
  • Colgate-Palmolive (CL) — $66.9 billion
  • The Clorox Company (CLX) — $17.4 billion

Performance of Church & Dwight in 2Q16

Church & Dwight reported 2Q16 net sales of $877.4 million, a rise of 3.6% from the net sales of $847.1 million in 2Q15. Sales of household products and personal care products rose by 1.8% and 9.9%, respectively, between 2Q15 and 2Q16. The company’s gross profit margin and income from operations rose by 5.6% and 23.2%, respectively.

Its net income and EPS (earnings per share) rose to $111.6 million and $0.85, respectively, in 2Q16, compared with $73.7 million and $0.55, respectively, in 2Q15. CHD’s cash and cash equivalents fell by 36.1%, and its inventories rose by 5.9% between 4Q15 and 2Q16. Its current ratio fell to 0.88x, and its debt-to-equity ratio rose to 1.14x in 2Q16, compared with 1.0x and 1.10x, respectively, in 4Q15.

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Quarterly dividend

The company has declared a regular quarterly dividend of $0.36 per share on its common stock. It also announced a two-for-one stock split of its common stock and is paying the stock dividend. The cash dividend and the stock dividend will be paid on September 1, 2016, to shareholders of record at the close of business on August 15, 2016. The company stated that “in addition to the quarterly cash dividend on a pre-split basis, stockholders will receive one additional share of common stock for each share of common stock they own.”

Projections

The company has made the following projections for fiscal 2016 and fiscal 3Q16:

Fiscal 2016

  • organic sales growth in the range of ~3% to 4% due to the introduction of new products in core business
  • gross margin of ~1.1% due to lower commodity costs and greater distribution efficiencies
  • operating margin expansion of ~0.60%
  • adjusted EPS growth in the range of 8% to 9%

Fiscal 3Q16

  • organic sales growth in the range of ~1% to 2%
  • reported EPS of $0.92

In the next part, we’ll look at Ecolab’s dividend.

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