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Its hard to find a product that is likely in every American household, but Church & Dwight Inc. (NYSE:CHD) has come closer than almost anyone to ccomplishing just that. The company was founded in 1846 and is the leading U.S. producer of sodium bicarbonate (i.e. baking soda), a natural product that cleans, deodorizes, leavens and buffers. The companys Arm & Hammer brand is one of the nations most iconic trademarks for a broad range of consumer and specialty products developed from the base of sodium bicarbonate and related technologies.
It operates through three segments: Consumer Domestic, Consumer International and Specialty Products. Product categories include cat litters, carpet deodorizers, laundry detergents and baking soda, as well as other baking soda based products under the Arm & Hammer brand. The company also owns the brands Trojan, Oxiclean, Nail, Orajel, Waterpik and Zicam, and it recently acquired Therabreath.
The company generated revenue of $5.1 billion in 2021 and currently has a market capitalization of $21.4 billion.
Financial review
Like many consumer product companies, in its most recent quarterly results, Church & Dwight reported mixed results with decent revenue growth but lackluster operating income and net income. Net sales grew 4.2% to $1.3 million with organic sales growing 3.4%, driven by price increases of 6.3% and volume declines of 2.9%. Operating income declined 12.4% and earnings per share was $0.76, a decline of 12.6% from the comparable quarter last year and flat versus the year-ago quarter's adjusted earnings per share.
Management stated:
Valuation
The company stated that they expect earnings per share for 2022 to be flat with the prior year. Consensus analyst estimates for earnings per share are $3.11 for 2022 and $3.40 for next year. The current year price-earnings ratio is approximately 28, which seems excessive. However, Church & Dwight has typically traded at high multiples due to steady growth and high free cash flow generation.