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Is Church & Dwight Stock a Buy, Hold or Sell at a 28.2X P/E Multiple?
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Church & Dwight Co., Inc. (CHD - Free Report) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 28.24, higher than the industry average of 22.11 and the S&P 500’s 22.21. This premium valuation raises concerns about whether CHD can meet investor expectations, especially considering its low Value Score of D, which suggests that it may not be a strong value proposition at current levels.
CHD Stock P/E Performance
Image Source: Zacks Investment Research
Church & Dwight’s shares have lost 4.5% over the past month, performing slightly better than the industry’s 4.9% dip but slightly worse than the broader Consumer Staples's 4.3% decline. During the same period, the S&P 500 slipped 0.2%, marking a broad-based weakness in the market.
CHD Stock Past Month Performance
Image Source: Zacks Investment Research
CHD is trading below its 50-day moving average, a key technical indicator that points to potential weakness in momentum. This suggests that the stock could face continued pressure unless an improvement in broader market sentiment emerges.
Current Pressures on CHD Stock
Church & Dwight is grappling with challenges tied to shifting consumer spending patterns in the current economic environment. The company observed a marked slowdown in dollar consumption growth, particularly in July 2024, when growth decelerated from 4.5% to approximately 2.5% in the third quarter. This trend reflects consumer adjustments to prolonged economic pressures, as well as external factors like hurricanes and the port strike.
Although there was some improvement in the U.S. consumption across the company’s categories during September and October, Church & Dwight remained cautious about the U.S. consumer trends and category growth rates as it headed into the fourth quarter.
The company remains optimistic about its brand performance, expecting its portfolio to outpace category growth. However, it adjusted its full-year forecast at its last earnings call, projecting organic revenue growth of about 4%. Reported sales growth is anticipated to be slightly lower, at approximately 3.5%, due to divestitures and adverse currency impacts.
Church & Dwight has been witnessing marketing expenses over the past few quarters, reflecting its strategic focus on enhancing brand awareness, particularly for new products and recently acquired brands. Church & Dwight expects marketing expenses to exceed 11% of net sales in 2024. While this heightened spending is designed to drive long-term momentum heading into 2025, it may weigh on near-term profitability.
Can Growth Initiatives Turn the Tide for CHD Stock?
Despite these challenges, Church & Dwight is committed to leveraging its strong brand equity to maintain profitability and drive growth. The company’s pricing power allows it to pass on cost increases to consumers with minimal impact on demand, as evidenced by its robust performance in the third quarter of 2024.
Online sales have emerged as a critical growth area for Church & Dwight, now accounting for 20.7% of global sales as of the third quarter. The company is focused on expanding its direct-to-consumer platforms and optimizing its omnichannel presence to capitalize on the sustained shift in consumer purchasing behavior toward online channels.
Church & Dwight’s successful acquisitions, including Flawless and Waterpik, have enhanced its position in health, beauty and personal care, aligning with key consumer trends. These acquisitions are driving long-term revenue and earnings growth while delivering strong returns on investment.
Continued innovation drives Church & Dwight's growth, with successes like ARM & HAMMER Power Sheets, BATISTE Sweat Activated and Hero's skincare solutions boosting market presence. TheraBreath's Deep Clean Oral Rinse has strengthened its position in the fast-growing oral care segment.
Revised Estimates Signal Strength in CHD Stock
Reflecting the positive sentiment around Church & Dwight, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have increased their estimates for the current and next fiscal year by 0.3% to $3.44 and by 0.5% to $3.74 per share, respectively. These estimates indicate expected year-over-year growth rates of around 8.5% and 8.7%, respectively.
CHD’s current position presents a mixed outlook, with strengths in brand equity, pricing power and strategic acquisitions, but challenges stemming from shifting consumer spending patterns and rising marketing expenses. While its valuation remains elevated compared to peers, the company’s strong portfolio of trusted brands, successful acquisitions and growing online sales provide growth opportunities. Current investors should retain their positions in CHD stock, while new investors might wait for a more favorable entry point. Church & Dwight currently carries a Zacks Rank #3 (Hold).
Three Picks You Can’t Miss
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Freshpet (FRPT - Free Report) , Ingredion Incorporated (INGR - Free Report) and Pilgrim’s Pride (PPC - Free Report) .
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.
Ingredion Incorporated manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently carries a Zacks Rank #2 (Buy). INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently carries a Zacks Rank of 2. PPC delivered an earnings surprise of 30.9% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year earnings indicates growth of 202.9% from the prior-year reported level.
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Is Church & Dwight Stock a Buy, Hold or Sell at a 28.2X P/E Multiple?
Church & Dwight Co., Inc. (CHD - Free Report) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 28.24, higher than the industry average of 22.11 and the S&P 500’s 22.21. This premium valuation raises concerns about whether CHD can meet investor expectations, especially considering its low Value Score of D, which suggests that it may not be a strong value proposition at current levels.
CHD Stock P/E Performance
Image Source: Zacks Investment Research
Church & Dwight’s shares have lost 4.5% over the past month, performing slightly better than the industry’s 4.9% dip but slightly worse than the broader Consumer Staples's 4.3% decline. During the same period, the S&P 500 slipped 0.2%, marking a broad-based weakness in the market.
CHD Stock Past Month Performance
Image Source: Zacks Investment Research
CHD is trading below its 50-day moving average, a key technical indicator that points to potential weakness in momentum. This suggests that the stock could face continued pressure unless an improvement in broader market sentiment emerges.
Current Pressures on CHD Stock
Church & Dwight is grappling with challenges tied to shifting consumer spending patterns in the current economic environment. The company observed a marked slowdown in dollar consumption growth, particularly in July 2024, when growth decelerated from 4.5% to approximately 2.5% in the third quarter. This trend reflects consumer adjustments to prolonged economic pressures, as well as external factors like hurricanes and the port strike.
Although there was some improvement in the U.S. consumption across the company’s categories during September and October, Church & Dwight remained cautious about the U.S. consumer trends and category growth rates as it headed into the fourth quarter.
The company remains optimistic about its brand performance, expecting its portfolio to outpace category growth. However, it adjusted its full-year forecast at its last earnings call, projecting organic revenue growth of about 4%. Reported sales growth is anticipated to be slightly lower, at approximately 3.5%, due to divestitures and adverse currency impacts.
Church & Dwight has been witnessing marketing expenses over the past few quarters, reflecting its strategic focus on enhancing brand awareness, particularly for new products and recently acquired brands. Church & Dwight expects marketing expenses to exceed 11% of net sales in 2024. While this heightened spending is designed to drive long-term momentum heading into 2025, it may weigh on near-term profitability.
Can Growth Initiatives Turn the Tide for CHD Stock?
Despite these challenges, Church & Dwight is committed to leveraging its strong brand equity to maintain profitability and drive growth. The company’s pricing power allows it to pass on cost increases to consumers with minimal impact on demand, as evidenced by its robust performance in the third quarter of 2024.
Online sales have emerged as a critical growth area for Church & Dwight, now accounting for 20.7% of global sales as of the third quarter. The company is focused on expanding its direct-to-consumer platforms and optimizing its omnichannel presence to capitalize on the sustained shift in consumer purchasing behavior toward online channels.
Church & Dwight’s successful acquisitions, including Flawless and Waterpik, have enhanced its position in health, beauty and personal care, aligning with key consumer trends. These acquisitions are driving long-term revenue and earnings growth while delivering strong returns on investment.
Continued innovation drives Church & Dwight's growth, with successes like ARM & HAMMER Power Sheets, BATISTE Sweat Activated and Hero's skincare solutions boosting market presence. TheraBreath's Deep Clean Oral Rinse has strengthened its position in the fast-growing oral care segment.
Revised Estimates Signal Strength in CHD Stock
Reflecting the positive sentiment around Church & Dwight, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have increased their estimates for the current and next fiscal year by 0.3% to $3.44 and by 0.5% to $3.74 per share, respectively. These estimates indicate expected year-over-year growth rates of around 8.5% and 8.7%, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Investment Opinion on CL Stock
CHD’s current position presents a mixed outlook, with strengths in brand equity, pricing power and strategic acquisitions, but challenges stemming from shifting consumer spending patterns and rising marketing expenses. While its valuation remains elevated compared to peers, the company’s strong portfolio of trusted brands, successful acquisitions and growing online sales provide growth opportunities. Current investors should retain their positions in CHD stock, while new investors might wait for a more favorable entry point. Church & Dwight currently carries a Zacks Rank #3 (Hold).
Three Picks You Can’t Miss
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Freshpet (FRPT - Free Report) , Ingredion Incorporated (INGR - Free Report) and Pilgrim’s Pride (PPC - Free Report) .
Freshpet, a pet food company, presently sports a Zacks Rank #1 (Strong Buy). FRPT has a trailing four-quarter earnings surprise of 144.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.
Ingredion Incorporated manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently carries a Zacks Rank #2 (Buy).
INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently carries a Zacks Rank of 2. PPC delivered an earnings surprise of 30.9% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year earnings indicates growth of 202.9% from the prior-year reported level.