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Church & Dwight Beat Q1 EPS Estimate on Higher Margins


May. 3 2019, Published 7:54 a.m. ET

Earnings exceeded expectations

Church & Dwight (CHD) posted better-than-expected bottom line results in the first quarter of 2019. Church & Dwight’s adjusted EPS of $0.70 came in ahead of Wall Street’s estimate of $0.66 and rose 11.1% on a YoY (year-over-year) basis. Church & Dwight’s bottom line benefited from margin expansion. However, an increase in the effective tax rate remained a drag.

Church & Dwight’s gross margin expanded 20 basis points to 45.1%, reflecting higher volumes and pricing. Meanwhile, productivity savings further supported its gross margin rate. However, higher commodity and manufacturing costs remained a drag. The company’s operating margin expanded 120 basis points to 23.1%, reflecting gross margin expansion and a lower selling, general, and administrative expense rate.

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In comparison, Procter & Gamble (PG), Colgate-Palmolive (CL), and Kimberly-Clark (KMB) also reported better-than-expected earnings during their last-reported quarters driven by higher pricing, productivity savings, and share repurchases. However, the Clorox Company (CLX) missed analysts’ EPS estimate.


We expect Church & Dwight’s bottom line to benefit from the continued strength in its base business driven by higher volumes and pricing. Meanwhile, cost savings are likely to support its earnings. Its management expects its gross margin to expand by 50 basis points in 2019, up from its earlier guidance of 10 basis points. Strong productivity programs, incremental pricing actions, and a favorable product mix are expected to drive its core gross margins and, in turn, its EPS.

CHD’s adjusted EPS are expected to be in the range of $2.43–$2.47 in 2019, reflecting YoY growth of 7%–9%. As for the second quarter, CHD’s adjusted EPS are projected to be $0.52, implying a YoY increase of 6%.


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