Church & Dwight's (CHD) International Unit To Aid Q4 Earnings

Church & Dwight Co., Inc. (NYSE:CHD) is slated to release fourth-quarter 2018 results on Feb 5. This provider of household, personal care and specialty products boasts a splendid surprise history. It has topped sales and earnings estimates for five and eight straight quarters, respectively. Let’s see what’s in store for the company this time around.

Organic Sales & Strong International Unit to Fuel Results

Church & Dwight’s organic sales are a key growth catalyst. Focus on innovation, improved volumes, positive product mix and pricing are fueling organic sales. Moreover, for 2018, organic sales are anticipated to rise 4%. This raises our expectations for the fourth quarter as well.

Markedly, the company’s consumer international business has been consistently contributing to the advancement in organic sales. Some of the yielding brands in this category are BATISTE, VITAFUSION, ARM & HAMMER and FEMFRESH. We note that ARM & HAMMER has become the company’s biggest international brands and is well placed to grow further in emerging markets. Further, the company’s international business gains from acquisitions and broad-based sales growth for household and personal care products.

With regard to buyouts, the company has acquired a number of premium high-margin brands over time. These businesses have been boosting the company’s revenues. Some of the noteworthy acquisitions are Waterpik, Agro BioSciences and VIVISCAL. Notably, the Zacks Consensus Estimate for sales in the segment is pegged at $177 million, reflecting a rise from $170 million in the year-ago quarter.

Church & Dwight Co., Inc. Price, Consensus and EPS Surprise

Headwinds in the Path

Church & Dwight grapples with weak gross margin trends, stemming from higher commodity and transportation expenses. Further, the Specialty Products unit reflects dismal performance, thanks to weak volumes. Delving deeper, the segment is weakened by lower demand for animal products from dairy customers that stemmed from low milk prices in the dairy industry. These factors have also compelled the company to lower dependence on the dairy space and increase focus on other businesses like poultry.

Nevertheless, we expect Church & Dwight to overcome the aforementioned hurdles with ease, backed by strong organic sales, international business and yielding buyouts. These upsides combined with strong online sales trend are expected to drive the company’s performance. These factors make us optimistic about the company’s fourth-quarter performance. Markedly, management expects net sales to increase by 3% for the fourth quarter of 2018. Further, the company expects earnings for the fourth quarter to be 57 cents per share, depicting a rise of 10% on an adjusted basis.

Estimates Indicate Growth Prospects

The Zacks Consensus Estimate for sales for the impending quarter is currently pegged at $1,067 million, indicating a rise of 3.3% from the prior-year quarter’s tally. Further, the Zacks Consensus Estimate for earnings is currently at 58 cents, which has been stable in the past 30 days and also compares favorably with 52 cents reported in the year-ago quarter.

What Does the Zacks Model Unveil?

Our proven model shows that Church & Dwight is likely to beat bottom-line estimates this quarter. For this to happen, the stock needs to have a positive Earnings ESP and 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 our Earnings ESP Filter.

Church & Dwight has a Zacks Rank #2 and an Earnings ESP of +2.80%, which makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat Earnings Estimates

Here are other companies you may want to consider, as our model shows that these too have the right combination of elements to post earnings beat.

Archer Daniels Midland Company (NYSE:ADM) , a Zacks #1 Ranked company, has an Earnings ESP of +2.45%.

Nomad Foods Limited (NYSE:NOMD) has an Earnings ESP of +1.45% and a Zacks Rank of 2.

The Estee Lauder Companies Inc (NYSE:EL) , a Zacks #3 Ranked stock, has an Earnings ESP of +1.16%.

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