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Why Analysts Remain on Sidelines for CHD and CLX

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Valuation a concern

The majority of analysts covering Church & Dwight (CHD) and Clorox (CLX) stock maintain a neutral outlook despite better growth prospects among peers. The stocks of both these companies are trading at a higher forward PE multiple than peers, which indicates that most of the positives are already factored into the stock.

CHD and CLX stock trade at forward PE multiples of 27.0x and 24.3x, which is higher than the forward PEs of Kimberly-Clark (KMB), Procter & Gamble (PG), and Colgate-Palmolive (CL) at 18.2x, 22.2x, and 23.2x, respectively.

Among the analysts covering CHD stock, 14 suggest a “hold,” six analysts recommend a “buy,” and two analysts have a “sell” recommendation. Analysts have a consensus target price of $64.84 per share on CHD stock, which implies a downside of 2.3% based on its closing price of $66.38 on March 19.

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Meanwhile, among the analysts covering CLX stock, ten suggest a “hold,” four analysts recommend a “buy,” and four analysts have a “sell” recommendation. Analysts have a consensus target price of $153.13 per share on CLX stock, which implies a downside of 2.4% based on its closing price of $156.87 on March 19.

Peer comparison

Cost headwinds and pressure on earnings are keeping analysts on the sidelines for PG, KMB, and CL stock. Analysts expect the margins of these consumer packaged goods companies to remain subdued amid continued inflation in commodity and logistics costs. Meanwhile, earnings are expected to remain pressured, reflecting lower margins and adverse currency rates.

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