International Unit To Fuel Church & Dwight (CHD) Q4 Earnings?

Church & Dwight Co., Inc. CHD is slated to release fourth-quarter 2017 results on Feb 5. We expect Church & Dwight to continue gaining from its stable portfolio of value and premium products, focus on innovations, benefits from buyouts and aggressive productivity programs. These factors have been driving Church & Dwight for a while now, with the Consumer International segment in particular.

Consumer International to Remain a Major Driver

Church & Dwight’s Consumer International business has been doing exceptionally well. Evidently, consistent strength at this segment has been driving the company’s overall organic sales growth for more than a year now. In the third quarter, organic sales in the consumer international segment jumped 6.2%, thanks to higher volumes. Also, overall consumer international sales surged 21.7% on the back of extensive sales of household and personal care items. Incidentally, sales at this segment received considerable impetus from FEMFRESH, OXICLEAN and STERIMAR in the export business, STERIMAR and ARM & HAMMER baking soda in Mexico, FEMFRESH in Australia as well as ARM & HAMMER cat litter and BATISTE in Canada. Further, the company is opening new offices to support increase in export business, and it continues to invest in the consumer international business to sustain its strong sales growth.

Clearly, this segment holds immense potential and is likely to sustain its splendid trend this time around as well. Markedly, the Zacks Consensus Estimate for sales at this segment is pegged at $154 million, reflecting a solid 20.3% upside from the year-ago reported figure.

Growth Initiatives to Continue Driving Performance

Further, Church & Dwight’s regular innovation helps in improving brand positions and market share in the consumer categories. Thus, management remains committed toward innovations in particular, as it believes that remains the biggest driver for its top and bottom-line growth in future. As for acquisitions, Church & Dwight has acquired a number of superior brands with high margin over time. These businesses boosted the company’s revenues from $1.5 billion in 2004 to $3.5 billion in 2016. Progressing on these lines, Church & Dwight concluded the buyout of Waterpik in third-quarter 2017 and is on track with its integration.

Church & Dwight Company, Inc. Price and EPS Surprise

Church & Dwight Company, Inc. Price and EPS Surprise | Church & Dwight Company, Inc. Quote


Together, such strategic endeavors drove Church & Dwight’s results in the third quarter. Despite bearing the brunt of hurricanes, both top and bottom lines grew year over year and topped estimates. While this marked the consumer products giant’s fourth consecutive quarter of positive earnings surprise, sales have outpaced the consensus mark in 12 of the last 14 quarters. In fact, Church & Dwight’s strong record has helped it jump 10.58% in the past three months, crushing the industry’s 2% growth.


Delving deeper into the results, we note that improved volumes drove organic sales by 3.2% — thereby retaining its long year-over-year growth trend. Apart from continued strength at consumer international, organic sales were also backed by growth in domestic sales and solid Specialty Products business improvement. In fact, broad-based growth across segments also helped the company to offset high promotional costs and generate bottom-line growth. A look at the consensus marks for sales for Church & Dwight’s other segment reveals that, Consumer Domestic segment is likely to deliver sales of $776 million (up from $695 million posted in the year-ago period), while consensus estimate for sales at the Specialty Products unit stands at $77 million (up 4.1% from the year-ago reported figure).

Q4 & 2017 Expectations as a Whole

All, said we expect this New Jersey-based company’s broad-based strength to continue helping it overcome increased promotional and other expenditures this time around. Encouragingly, management expects reported and organic sales growth of 11.2% and 3.2%, respectively in the fourth quarter. International sales are anticipated to jump 6.2%, whereas sales of Specialty Products are expected to advance 7.5%, both on reported and organic basis.  Management also expects domestic volumes to gain 7% and lead to market share gains. All said, the company expects adjusted earnings of 50 cents in the fourth quarter, reflecting year-over-year growth of 14%.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 50 cents, which represents more than 13% growth from the year-ago period. Moreover, analysts polled by Zacks expect revenues of $1,007 million, up 12.4% from the year-ago reported figure. For full-year 2017, Church & Dwight envisions bottom line to increase 8.5% year over year to $1.92, which is in line with the consensus mark.

What the Zacks Model Unveils

To top it, our proven model shows that Church & Dwight is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

Well, Church & Dwight possesses the right combination, as the Zacks Rank #3 company has an Earnings ESP of +0.17%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

Here are some other companies that possess the right combination of elements to post an earnings beat:

Sysco Corporation SYY has an Earnings ESP of +0.78% and carries a Zacks Rank #2.

Philip Morris International Inc. PM has an Earnings ESP of +0.74% and a Zacks Rank #3.

Coty Inc. COTY has an Earnings ESP of +1.99% and carries a Zacks Rank of 3.

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