Church & Dwight Company Inc.CHD

Morningstar Rating

Stock Research and Analysis

by Erin Swanson, CFA

Recent acquisitions, cost-reduction efforts, and improvements in innovation capabilities have significantly improved Church & Dwight's (C&D) performance in recent years, but we believe the firm may be challenged to continue to drive such strong Read more

Bulls Say

Church & Dwight has successfully leveraged the strength of its leading brands. Arm & Hammer accounts for about 35% of its total portfolio, with about 80% of U.S. households purchasing at least one Arm & Hammer product.

We're quite impressed that management has consistently improved the firm's cost structure, realizing a 400-basis-point improvement in gross margins and a 200-basis-point improvement in operating margins over the past five years.

According to Church & Dwight, more than 90% of its product portfolio consists of number-one and number-two brands, which should help ensure it maintains shelf space at retailer outlets.

Due to its lack of international exposure, as sales outside of the U.S. account for around 20% of annual sales, Church & Dwight still has the opportunity to expand the distribution of its products. Read more

Bears Say

Consumers may balk at the higher prices Church & Dwight is charging on its products, favoring lower-priced private-label offerings at the expense of branded products. In particular, the laundry, cat litter, and pregnancy kit categories are currently suffering from the impact of consumers trading down.

Church & Dwight competes with much larger rivals in many of its product categories. Should its competitors decide to significantly step up brand investment to gain market share, the company's limited resources would make it difficult to respond.

Although some commodity costs have abated from unprecedented high levels, it is unclear whether these lower costs will persist. Read more

Strategy

Church & Dwight's stated strategy is to expand its number-one and number-two brands internally through increased marketing and innovation, though acquisitions have contributed heavily to the firm's Read more

Management

James Craigie took over as president and CEO of Church & Dwight in July 2004, becoming chairman and CEO in May 2007. Prior to joining Church & Dwight, Craigie served as president of The Top-Flite Golf Company, overseeing that firm's bankruptcy Read more

Profile

Church & Dwight is the world's leading producer of baking soda. More than a handful of its products are sold under the Arm & Hammer brand, including its baking soda, Read more

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