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Church & Dwight Is Likely to Best Its Peers on Sales Growth Front

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Past performance

Church & Dwight (CHD) has impressed with its sales performance in the past several quarters. The company has surpassed Wall Street’s estimates in the last seven quarters thanks to incremental sales from its acquisitions. Moreover, its base business remains strong, as is reflected in its stellar organic sales growth.

Church & Dwight’s organic sales have increased by more than 4% in the past four consecutive quarters. Its organic sales jumped 4.5% during the last reported quarter, reflecting a robust rise in volumes of 10.2% in the Consumer International segment.

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The organic sales of other household and personal care product manufacturers also impressed. Higher pricing and favorable product mix drove the underlying sales of these companies. Colgate-Palmolive’s (CL) organic sales increased 3% during its last-reported quarter. Moreover, Procter & Gamble (PG) registered 5% growth in its organic sales during the recently concluded quarter. Meanwhile, Kimberly-Clark’s (KMB) organic sales increased by 3%.

Outlook

We expect Church & Dwight to outperform its peers in terms of sales growth in the coming quarters. Continued strength in its base business driven by a strong portfolio of value and premium products and innovations is expected to support its organic sales. Moreover, expanded distribution is likely to drive its sales further. Improved organic sales and incremental sales from acquisitions are expected to drive its top line in the coming quarters.

Church & Dwight’s management has raised its full-year sales outlook. The company’s net sales are expected to register 5%–6% growth in 2019. Its acquisition of the FLAWLESS brand is likely to contribute ~200 basis points to its top line growth. Its management expects its organic sales to mark 3.5% growth in 2019 driven by innovation-led new products and higher pricing.

In comparison, we expect the company’s peers to mark year-over-year revenue improvements. However, their growth rates are likely to remain lower than Church & Dwight’s.

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