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Church & Dwight (CHD) Queued for Q4 Earnings: What's in Store?

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Church & Dwight Co., Inc. CHD is likely to report an increase in the top line when it releases fourth-quarter 2020 numbers on Jan 29. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.26 billion, which indicates an increase of 10.2% from the prior-year quarter’s reported figure. For 2020, the consensus mark is pegged at $4.86 billion.

However, the company’s bottom line is expected to have declined in the fourth quarter. The Zacks Consensus Estimate has remained unchanged in the past 30 days at 53 cents per share. The estimate suggests decline of 3.6% from the year-ago quarter’s reported figure. For 2020, the Zacks Consensus Estimate for earnings is pegged at $2.82 per share, which suggests an increase of 14.2% from the prior-year’s reported figure. Notably, Church & Dwight delivered an earnings surprise of 4.5% in the last reported quarter. Also, the company has a trailing four-quarter earnings surprise of almost 9%, on average.

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

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

Church & Dwight Co., Inc. price-eps-surprise | Church & Dwight Co., Inc. Quote

Key Factors to Note

Church & Dwight has been gaining from rising consumer demand for its products amid the pandemic. In this regard, the company is on track with boosting manufacturing capacity at plants to continue tapping the rise in demand triggered by the pandemic. In its last earnings call, management stated that consumers are consolidating their shopping trips through stock-piling, which in turn, is contributing toward demand rise. Moreover, its strong brand position across various categories, positions it well to continue growing amid COVID-19. Further, the company is working with retail associates and suppliers to ensure a smooth supply chain and support the higher demand.

Incidentally, the company anticipates sales growth of nearly 11% and organic revenue increase of roughly 9% in 2020. Adjusted earnings per share is likely to have had increased between 13-14% in 2020. For the fourth quarter, management expects sales increase of 9%, while organic sales are expected to have increased 8%. Further, Church & Dwight envisions adjusted earnings per share in the band of 50-52 cents in the quarter.

Also, increased social-distancing trends have been spurring online sales. For 2020, management expects online sales contribution of nearly 14% to total sales. Apart from this, Church & Dwight’s regular innovation is a driver. Toward this end, the company recently launched new gummy vitamin products like Triple Immune Power, Apple Cider Vinegar, Organic Prenatal Multi, and IRRESISTIBLE SKIN under the VITAFUSION banner.

However, Church & Dwight expects gross margin contraction as well as major increase in marketing expenses during the fourth quarter. In fact, elevated marketing expenses (as a percentage of sales) are likely to have had an adverse impact on the bottom line in the quarter under review. For 2020, management anticipates gross margin decline of 20 basis points thanks to tariffs on WATERPIK products, COVID-19 related costs, acquisition accounting, new product support as well as incremental manufacturing and distribution capacity investments.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Church & Dwight this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Church & Dwight carries a Zacks Rank #2 and an Earnings ESP of -0.95%.

Stocks With Favorable Combinations

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

Estee Lauder EL currently has an Earnings ESP of +0.55% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods TSN currently has an Earnings ESP of +0.16% and a Zacks Rank of 3.

Altria MO currently has an Earnings ESP of +0.14% and carries a Zacks Rank #3.

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