Church & Dwight Co., Inc. (NYSE:CHD) just released its third-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.4% to hit US$1.2b. Church & Dwight also reported a statutory profit of US$0.85, which was an impressive 27% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Church & Dwight's 16 analysts is for revenues of US$4.97b in 2021, which would reflect an okay 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 4.9% to US$3.01 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$4.92b and earnings per share (EPS) of US$2.96 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$92.76. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Church & Dwight analyst has a price target of US$114 per share, while the most pessimistic values it at US$52.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Church & Dwight's revenue growth will slow down substantially, with revenues next year expected to grow 4.8%, compared to a historical growth rate of 7.1% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.2% next year. So it's pretty clear that, while Church & Dwight's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Church & Dwight going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Church & Dwight that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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