Organic Sales To Boost Church & Dwight's (CHD) Q2 Earnings

Church & Dwight Co., Inc. (NYSE:CHD) is slated to release second-quarter 2019 results on Jul 31. This provider of household and personal care products has surpassed the Zacks Consensus Estimate at an average of 4% in the trailing four quarters.

Let’s see how things are placed ahead of the upcoming quarterly release.

Estimates Appear Bright

The Zacks Consensus Estimate for earnings has been stable in the past 30 days at 52 cents, which indicates growth of 6.1% from the year-ago quarter’s reported figure.

Also, the consensus mark for revenues is pegged at $1,074 million, suggesting a rise of 4.5% from the figure reported in the year-ago quarter.

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

Organic Sales, International Growth & Pricing: Key Drivers

Consistent growth in organic sales has been driving Church & Dwight for a while, courtesy of a solid product portfolio and focus on innovation. Moreover, improved product mix and rapid growth in the international market has been boosting organic sales. For the second quarter, management expects organic sales to rise 3.5%.

Speaking of the international business, brands like BATISTE, ARM & HAMMER, NAIR and FEMFRESH are boosting growth for the company. Moreover, higher broad-based sales of household and personal care products across key global markets are likely to keep driving Church & Dwight’s performance. Acquisitions have also played a key role in boosting its international presence. Additionally, the company’s domestic categories have been expanding steadily. These factors are expected to support second-quarter 2019 results.

The Zacks Consensus Estimate for net sales in the Consumer International segment is currently pegged at $185 million, suggesting an increase from $174 million reported in the year-ago quarter. The consensus mark for Consumer Domestic segment sales is at $814 million, indicating increase from $774 million delivered in the year-ago quarter.

Moving on, we expect Church & Dwight’s pricing initiatives to yield favorably in the to-be-reported quarter. Such efforts are expected to counter pressures stemming from rising costs and facilitate gross margin growth as witnessed in the last reported quarter. Markedly, management expects gross margin to expand in 2019 on the back of pricing, product mix and productivity programs. This boosts expectations for the second-quarter results as well.

On the flip side, we note that Specialty Products unit has been struggling for quite some time. Weak volumes stemming from sluggish demand in the dairy industry are exerting pressure on this unit. Nevertheless, the company is expected to tide over such hurdles, courtesy of its strategy to reduce dependency on the dairy space and increase focus on other businesses like poultry.

All said, management projected top-line growth of nearly 4% for the second quarter. Also adjusted earnings are expected to rise almost 6% in the said period.

What the Zacks Model Says

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 a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight’s Zacks Rank #2 combined with an Earnings ESP of +1.22% makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks Poised to Beat Earnings Estimates

Here are other companies you may want to consider as our model shows that they also have the right combination of elements to beat estimates.

The Estee Lauder Companies Inc (NYSE:EL) has an Earnings ESP of +7.80% and a Zacks Rank #2.

The J. M. Smucker Company (NYSE:SJM) has an Earnings ESP of +1.06% and a Zacks Rank #2.

Altria Group, Inc (NYSE:MO) has an Earnings ESP of +0.91% and a Zacks Rank #3.

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