Church & Dwight Gains On International Unit, Brand Strength
Zacks Investment Research | Feb 11, 2020 08:27PM ET
Church & Dwight Co., Inc. (NYSE:CHD) has been benefiting from its strong Consumer International business, yielding buyouts and focus on innovation. Continued gains from these factors were reflected in the fourth-quarter 2019 results, wherein the top line improved year over year as well as beat the Zacks Consensus Estimate. However, Church & Dwight has been grappling with cost challenges. Nevertheless, management has issued an encouraging view for the first quarter and 2020.
Factors Working Well for Church & Dwight
Church & Dwight’s Consumer International business has been consistently contributing to the company’s organic sales growth. In fourth-quarter 2019, net sales in the segment climbed 10.1% to $196.6 million, backed by broad-based sales growth for household and personal care products, along with gains from the Global Markets Group business. Organic sales increased 10.6% on volume growth as well as gains from pricing and product mix. Organic sales were mainly driven by BATISTE dry shampoo and STERIMAR in the Global Markets Group business, ARM & HAMMER clumping cat litter and liquid laundry detergent in Canada, BATISTE in Germany, ARM & HAMMER liquid laundry detergent in Mexico and WATERPIK in various countries.
As the international arena remains a bright spot for the company, it continues to invest in this segment to sustain solid sales growth. Talking of organic sales, Church & Dwight has been witnessing growth for a while now. In the fourth quarter, organic sales grew 4.4%, coming ahead of the company’s guidance of a 3% increase. This uptick was fueled by positive product mix and pricing. The company anticipates organic sales to be up 3.5% in 2020 and nearly 3% in the ongoing quarter.
Notably, Church & Dwight’s focus on innovations and acquisitions have helped enhance its brand portfolio. To this end, the buyout of FLAWLESS has been a prudent addition to Church & Dwight’s portfolio and is likely to become part of its power brands. Some of the previous noteworthy acquisitions of the company include Waterpik, Agro BioSciences, and VIVISCAL business. Markedly, the company’s power brands, including ARM & HAMMER, Trojan, OxiClean, Spinbrush, First Response, Nair, Orajel, Xtra, VMS, Waterpik and Batiste, represent majority of its consumer sales. During the final quarter of 2019, the company registered growth across 10 of its power brands. Further, Church & Dwight looks forward to having 20 power brands in its portfolio over time.
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Driven by such upsides, this Zacks Rank #3 (Hold) stock has jumped 9.4% in the past three months compared with the Zacks Investment Research
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