Why Church & Dwight Shares Are Falling Today

Church & Dwight Company, Inc. CHD reported fourth-quarter net sales of $1.528 billion, up 6.4% year over year. 

Quarterly sales exceeded the company’s outlook of 5% growth, surpassing the analyst consensus of $1.51 billion.

Organic sales increased 5.3%, exceeding the company’s outlook of 4%, driven by 4% favorable price and product mix and 1.3% higher volume.

Adjusted EPS in the quarter was $0.65, in line with the analyst consensus.

Consumer Domestic net sales were $1.193 billion, a 6.4% increase driven by both household and personal care sales growth. 

Consumer International net sales were $258.8 million, an 11.9% increase year over year. Specialty Products’ net sales were $76.2 million, a 9.2% decrease.

Gross margin increased 260 basis points to 44.6% due to improved pricing, volume, productivity, and the impact of the HERO acquisition.

Dividend: The company declared a 4% increase in the quarterly dividend from $0.2725 to $0.28375 per share, equivalent to an annual dividend of $1.135 per share. 

The quarterly dividend will be payable on March 1, 2024. This raises the annual dividend payout from $267 million to approximately $276 million.

Outlook: Church & Dwight expects 2024 reported and organic sales growth to be 4%-5% and adjusted EPS growth of 7%-9%.

For the first quarter, the company expects adjusted EPS of $0.85 (estimate $0.93) and expects reported and organic sales growth of approximately 4%.

The analyst revised its “Evergreen” business model (the last revision was in 2018). The revised evergreen model calls for a 4% organic net sales growth target (previously 3%) and 25 to 50 basis points of gross margin expansion target (previously 25 bps).

Price Action: CHD shares were trading lower by 2.25% to $99.49 on the last check Friday.