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Church & Dwight Stock Sailing Smoothly, Peers Struggle

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Strong H1 2018 financial performance

As most household and personal care product manufacturers struggle to increase sales, Church & Dwight (CHD) is sailing smoothly. It impressed investors with its financial performance in the first half of 2018, recording stellar sales and earnings growth. A focus on innovation, a balanced portfolio of value and premium brands, strategic acquisitions, and a lower effective tax rate are driving the company’s top and bottom lines.

In the last reported quarter, Church & Dwight’s top line rose 14.5%, which was much higher than the low-single-digit sales growth for Procter & Gamble (PG), Kimberly-Clark (KMB), Colgate-Palmolive (CL), and Clorox (CLX).

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Church & Dwight’s bottom line grew at a solid double-digit rate in the first two quarters of 2018. Its first-quarter adjusted EPS rose 21.2%, while its second-quarter EPS increased 19.5%. A significant decline in the adjusted effective tax rate and strong top-line performance are driving its bottom line.

In comparison, the bottom line of Procter & Gamble, Kimberly-Clark, Colgate-Palmolive, and Clorox also improved YoY, reflecting lower taxes. However, the rate of growth remained well below Church & Dwight’s.

YTD stock performance

Church & Dwight stock has risen 10.5% YTD (year-to-date) as of August 14 and outperformed the broader markets as well as its peers. Procter & Gamble, Kimberly-Clark, Colgate-Palmolive, and Clorox have fallen 11.5%, 7.9%, 13.2%, and 4.6%, respectively, YTD. The S&P 500 Index (SPY) has risen 6.2% YTD.

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