Key Takeaways from Church & Dwight’s Impressive First Quarter



First-quarter snapshot

Church & Dwight (CHD) posted stronger-than-expected first-quarter earnings results on May 2. Its top and bottom lines came in ahead of analysts’ estimates. Healthy volumes, higher pricing, and a favorable mix drove the company’s organic sales and, in turn, its net sales. However, adverse currency rates remained a drag.

Church & Dwight’s organic sales increased 4.5%, marking the fourth consecutive quarter during which the company registered more than 4% growth. Its better-than-expected organic sales growth was driven by stellar volume growth of 10.2% in the Consumer International segment.

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Church & Dwight’s gross and operating margins expanded in the first quarter, which was impressive, especially given its higher manufacturing and logistics costs. Higher pricing and cost savings drove CHD’s margins.

Improved organic sales and higher margins supported the company’s first-quarter earnings, which exceeded analysts’ estimate. However, the higher tax rate remained a drag.

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Where could CHD stock be headed?

Shares of Church & Dwight rose 1.4% on May 2, reflecting the company’s better-than-expected first-quarter results. Its management also raised its full-year sales and gross margin outlooks, which was positive. We expect CHD to benefit from continued momentum in its base business. However, challenges in the Specialty Products segment and the company’s high valuation could limit its upside.

On a YTD basis, CHD is up 13.5%. Improved organic sales and productivity savings are driving the shares of the company’s peers. Colgate-Palmolive (CL), Procter & Gamble (PG), and Kimberly-Clark (KMB) stocks are up 20.7%, 14.8%, and 11.7%, respectively, on a YTD basis.


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