With a market cap of $25.4 billion, Church & Dwight Co., Inc. (CHD) operates in the household and personal care industry, known for its leading ARM & HAMMER brand. The Ewing, New Jersey-based company offers a diverse portfolio of consumer products, including Trojan, OxiClean, and Waterpik, sold globally.
Companies valued at $10 billion or more are generally classified as “large-cap” stocks, and Church & Dwight fits this criterion perfectly, exceeding the mark. Church & Dwight is renowned for its strong portfolio of iconic, innovative consumer brands, along with its expertise in niche markets like animal productivity and specialty inorganic chemicals, positioning it as a leader in both household and personal care products globally.
However, shares of the household and personal products maker are currently trading at a 5.7% discount to its 52-week high of $110.31, reached in June. CHD has fallen 2.3% over the past three months, underperforming the Consumer Staples Select Sector SPDR Fund’s (XLP) 9.3% rise during the same period.
Longer term, CHD’s shares have risen 10% on a YTD basis, lagging behind XLP's 16.5% gain. Furthermore, CHD's shares have gained 8.7% over the past 52 weeks, compared to XLP's 16.7% gains over the same time frame.
Yet, CHD has been trading above its 50-day and 200-day moving averages since the beginning of this month, indicating a bullish trend.
Church & Dwight's underperformance can be attributed to its higher valuation relative to historical averages, slower growth in key brands like Therabreath and Hero, and a lag in achieving pre-pandemic profit margins despite strong operational improvements.
Moreover, despite reporting better-than-expected Q2 adjusted EPS of $0.93, the stock fell 1.5% on Aug. 2 due to a downward revision of its full-year forecasts, citing consumer reluctance to spend on higher-priced household and personal care products amidst persistent inflation. This cautious consumer behavior led to slower-than-expected growth in consumption and lower-than-anticipated average selling price increases, impacting the company's financial outlook.
Also, CHD has lagged behind its rival, The Procter & Gamble Company (PG), which rose 13.7% over the past 52 weeks and 18.8% on a YTD basis.
Despite CHD’s weak price action, analysts are moderately optimistic, with a consensus rating of "Moderate Buy" from 22 analysts. As of writing, the stock is trading slightly below the mean price target of $105.11.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
