Church & Dwight Co., Inc. (NYSE:CHD): Is It A Good Long Term Opportunity?
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Church & Dwight Co., Inc.’s (NYSE:CHD) announced its latest earnings update in December 2018, which signalled that the company experienced a immense headwind with earnings declining by -24%. Below, I’ve laid out key numbers on how market analysts perceive Church & Dwight’s earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Church & Dwight
Analysts’ expectations for next year seems rather muted, with earnings climbing by a single digit 8.6%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 16% compared to today’s earnings, and finally hitting US$682m by 2022.
Even though it’s useful to be aware of the growth year by year relative to today’s level, it may be more valuable determining the rate at which the company is rising or falling every year, on average. The pro of this method is that we can get a better picture of the direction of Church & Dwight’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 5.9%. This means that, we can presume Church & Dwight will grow its earnings by 5.9% every year for the next few years.
Next Steps:
For Church & Dwight, there are three essential aspects you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is CHD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CHD is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CHD? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.
