Church & Dwight Earnings: Higher Prices Prop Up Sales, but Volumes Remain Tepid

After unpacking no-moat Church & Dwight's first-quarter results (5.7% organic sales growth and a 70-basis-point downdraft in adjusted operating margin to 20.9%), we don't anticipate any change to our $60 fair value estimate. The sales increase was entirely a byproduct of higher prices and favorable mix as volumes held flat, evidencing an anemic brand mix. Cost pressures (a 360-basis-point drag on gross margin) persist; Church still expects $125 million in incremental commodity, distribution, and labor costs in fiscal 2023 on top of the $290 million and $250 million incurred in fiscal 2021 and 2022, respectively.