Stellar performance last year
Church & Dwight (CHD) performed impressively last year, surpassing peers. The company’s top and bottom lines grew at strong double-digit percentage rates, thanks to incremental benefits from recent acquisitions, innovation-led products, and price increases. Meanwhile, its bottom line benefited from improved sales and a considerably lower tax rate following US tax reform.
The company’s stock has fallen this year, with its sales and earnings growth expected to decelerate slightly. Church & Dwight is facing a tough year-over-year comparison and has annualized its recent acquisition.
What to expect
We expect Church & Dwight’s growth to decelerate slightly this year with adverse currency rates and the absence of incremental benefits from acquisitions. However, its sales growth could outperform that of peers Colgate-Palmolive (CL), Procter & Gamble (PG), Kimberly-Clark (KMB), and Clorox (CLX).
Sustained volume growth led by innovation, higher pricing, and a favorable mix is expected to drive its organic sales, and in turn, its net sales growth. The expansion of Church & Dwight’s export business should further support its top line.
Meanwhile, Church & Dwight’s bottom line is expected to mark high single-digit percentage growth this year, driven by improved organic sales and cost savings. However, higher input and logistics costs could pressure its margins and EPS growth.