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Church & Dwight Continues to Outperform with Its Earnings Growth

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Jun. 21 2019, Updated 3:04 p.m. ET

CHD’s earnings have grown at a double-digit rate

Church & Dwight’s (CHD) earnings have grown at a strong double-digit rate in the past several quarters and have outpaced those of its rivals. The company has surpassed Wall Street’s expectations in five out of the past six quarters. Meanwhile, its adjusted earnings have grown at an average rate of 16.3% in the period.

Church & Dwight’s strong sales, cost and productivity savings, and lower effective tax rate have driven double-digit growth in its bottom line.

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In comparison, Kimberly-Clark (KMB) and Colgate-Palmolive (CL) have marked YoY (year-over-year) declines in their EPS as cost headwinds have continued to hurt their bottom lines. Meanwhile, Procter & Gamble (PG) has managed to increase its EPS on a YoY basis thanks to higher pricing, share buybacks, and a lower tax rate.

Outlook

We expect Church & Dwight to continue to outperform its peers in terms of EPS growth in the coming quarters. Church & Dwight’s bottom line is likely to benefit from continued growth in its underlying sales driven by higher volumes and pricing. Meanwhile, cost and productivity savings are expected to support its margins and, in turn, its earnings.

CHD’s management expects its gross margin to improve in 2019 despite cost headwinds, which is encouraging. Management expects its 2019 EPS to be in the range $2.43–$2.47, implying growth of 7%–9% YoY. Wall Street expects CHD’s bottom line to grow 9.3%—a much higher rate than its peers—in 2019.

Analysts expect Colgate-Palmolive’s bottom line to register a mid-single-digit decline in 2019. Meanwhile, Kimberly-Clark’s adjusted EPS are expected to register an increase in the low single digits. Moreover, Procter & Gamble’s bottom line is expected to report mid-single-digit growth in 2019 and 2020.

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