Church & Dwight Posts Upbeat Q4 Results, Shares Rise 4.4%

Shares of household products maker Church & Dwight (NYSE: CHD) jumped 4.4% on January 28 to close at $103, after it delivered stronger-than-expected fourth-quarter results and issued impressive FY2022 guidance.

Despite ongoing supply chain disruptions, the quarterly beat was driven by strong business performance aided by robust double-digit consumption growth across most categories.

Q4 Beat

Adjusted earnings of $0.64 per share grew 20.8% year-over-year, exceeding analysts’ expectations of $0.60 per share. The company reported adjusted earnings of $0.53 per share for the prior-year period.

Furthermore, net sales jumped 5.7% year-over-year to $1.37 billion and exceeded consensus estimates of $1.33 billion. Driven by positive pricing, favorable product mix, and partially offset by lower volume, the increase in revenues reflects a 4.3% surge in organic sales, which exceeds the company’s guidance of 2% . 

However, due to higher manufacturing costs, gross margin declined 50 basis points to 42.5%.

4% Dividend Increase

The company raised its quarterly dividend by 4% to $0.2625 per share. The dividend is payable on March 1 to shareholders on record as of February 15.

The company has hiked dividends for 26 consecutive years, which was marked by the annual dividend of $1.05 per share. The Company has paid a consecutive quarterly dividend for 121 years.

FY2022 Guidance

Based on robust Q4 results, management issued the financial guidance for FY2022. The company forecasts adjusted earnings in the range of $3.14 to $3.26 per share, while the consensus estimate is pegged at $3.21 per share.

Furthermore, net sales are forecast to grow between 5% and 8%, with organic sales growth of 3% to 6%.

For the first quarter, adjusted earnings are likely to be $0.75 per share.Net sales are projected to grow between 3% to 4%, with organic sales growth of 1% to 2%.

Management Commentary

Looking ahead into FY2022, CEO Matthew Farrell, commented, “In 2022, we expect several categories to remain at elevated consumption levels, including gummy vitamins, laundry, laundry additives, hair growth supplements, and cat litter. ”

Farrell added, “We are committed to offsetting inflation with price. In 2022, we expect to experience higher inflation at a faster rate than our price increases take effect. However, as we enter 2023, we expect inflation to be fully offset by previously announced price increases plus anticipated incremental price actions in 2022.

Wall Street’s Take

Following the Q4 results, J.P. Morgan analyst Andrea Faria Teixeira reiterated a Sell rating on the stock with a price target of $87 (15.53% downside potential).

Consensus among analysts is a Hold based on 2 Buys, 6 Holds  and 3 Sells. The average Church & Dwight stock forecast was $96.60, which implies 6.2% downside potential to current levels.

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