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Church & Dwight Co Inc CHD

Morningstar Rating
$104.31 +0.10 (0.10%)
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Company Report

No-Moat Church & Dwight's Sales Could Stumble in the Face of Mounting Competitive Pressures

We’ve long held no-moat Church & Dwight lacks the scale, resources, and negotiating prowess of its larger brethren. We see this as an unenviable position, particularly when juxtaposed with persistent macro and competitive pressures, cost headwinds, and supply chain tension. Although Church has emphasized 40% of its mix skews toward value offerings, we're skeptical this alone will insulate it. Rather, we posit Church’s category mix makes the firm susceptible to consumers trading down or out if their financial position warrants. Beyond the top line, we surmise reaching its 45% prepandemic gross margin could be delayed by intensifying competition (from well-resourced peers and lower-priced private-label offerings) if promotional spending steps up from relatively dormant levels the past few years. As a smaller operator with less-entrenched retail relationships, we think this could put Church in the crosshairs, making further margin expansion harder to come by. Further, while inflationary headwinds in aggregate have died down, labor, transportation, and logistics remain elevated and could put added pressure on its margin trajectory.

Price vs Fair Value

CHD is trading at a 54% premium.
Price
$102.99
Fair Value
$57.00
Uncertainty
Medium
1-Star Price
$23.54
5-Star Price
$88.60
Economic Moat
Mhd
Capital Allocation
Qndqbghyy

Bulls Say, Bears Say

Bulls

We think Church could boost sales by expanding the distribution of its recently acquired brands, TheraBreath mouthwash and Hero pimple patches, on its home turf.

Bears

We expect promotions will ultimately return to historical levels, which would damp sales and gross margins.

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News

Trading Information

Previous Close Price
$104.21
Day Range
$103.89104.70
52-Week Range
$82.25105.67
Bid/Ask
$103.90 / $104.77
Market Cap
$25.44 Bil
Volume/Avg
1.7 Mil / 1.3 Mil

Key Statistics

Price/Earnings (Normalized)
33.01
Price/Sales
4.40
Dividend Yield (Trailing)
1.06%
Dividend Yield (Forward)
1.09%
Total Yield
2.24%

Company Profile

Church & Dwight is the leading global producer of baking soda. Beyond baking soda, the products in its portfolio have vast category reach, including laundry products, cat litter, oral care, deodorant, and nasal care, all sold under the Arm & Hammer brand. Its mix also includes Xtra, Trojan, OxiClean, First Response, Nair, L’il Critters/Vitafusion, Orajel, and WaterPik, which together with Arm & Hammer constitute around 70% of its annual sales and profits. And the firm added TheraBreath mouthwash and Hero pimple patches to its mix the past couple of years. Even as it works to extend the reach of its products, Church & Dwight still derives more than 80% of its sales from its home market in the US.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Mid Core
Total Number of Employees
5,550

Competitors

Valuation

Metric
CHD
CLX
PG
Price/Earnings (Normalized)
33.0126.2625.36
Price/Book Value
6.58358.458.00
Price/Sales
4.402.614.78
Price/Cash Flow
24.8423.0320.03
Price/Earnings
CHD
CLX
PG

Financial Strength

Metric
CHD
CLX
PG
Quick Ratio
0.610.490.40
Current Ratio
1.080.860.64
Interest Coverage
9.722.5220.66
Quick Ratio
CHD
CLX
PG

Profitability

Metric
CHD
CLX
PG
Return on Assets (Normalized)
9.58%10.48%13.58%
Return on Equity (Normalized)
21.40%376.90%35.76%
Return on Invested Capital (Normalized)
14.37%19.73%20.36%
Return on Assets
CHD
CLX
PG
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