Church & Dwight Earnings: Despite Recent Marks, Durable Gains Abroad an Uphill Battle; Shares Rich

No-moat Church & Dwight’s efforts to expand its international reach (18% of sales, up nearly 10% in the quarter) helped buoy consolidated sales, up 4.2% on an organic basis in the fourth quarter. This growth comes on the heels of distribution gains for two of its recently acquired brands, Hero and TheraBreath (qualitatively referenced). However, we’re skeptical this pace will continue unabated. From where we sit, winning internationally could prove a tough slog, given varying consumer preferences and regulatory backdrops around the world. This underpins our expectations for just 5% average annual sales growth from its international business longer term. When taken with more-muted prospects on its home turf (around three quarters of its sales base, up just 2.7% in the quarter), we don’t expect to alter our projections for 3%-4% annual sales growth on a consolidated basis over the next 10 years.