Is Church & Dwight Stock a Buy, Hold or Sell at a 28.2X P/E Multiple?

Core Insights - Church & Dwight Co., Inc. (CHD) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 28.24, which is higher than the industry average of 22.11 and the S&P 500's 22.21, raising concerns about meeting investor expectations [1] - The company is facing challenges due to shifting consumer spending patterns, with a notable slowdown in dollar consumption growth from 4.5% to approximately 2.5% in July 2024 [5] - Despite these challenges, Church & Dwight remains optimistic about its brand performance and expects its portfolio to outpace category growth, projecting organic revenue growth of about 4% for the full year [6] Financial Performance - The Zacks Consensus Estimate for earnings per share has seen upward revisions, with current and next fiscal year estimates increased by 0.3% to $3.44 and by 0.5% to $3.74 per share, indicating expected year-over-year growth rates of around 8.5% and 8.7% respectively [9] - Reported sales growth is anticipated to be slightly lower at approximately 3.5% due to divestitures and adverse currency impacts [6] Market Position and Strategy - Online sales now account for 20.7% of global sales, with the company focusing on expanding its direct-to-consumer platforms and optimizing its omnichannel presence [7] - Continued innovation, such as ARM & HAMMER Power Sheets and TheraBreath's Deep Clean Oral Rinse, is driving growth and enhancing market presence [8] - The company has been increasing marketing expenses, expected to exceed 11% of net sales in 2024, to enhance brand awareness and drive long-term momentum [18] Challenges and Outlook - Church & Dwight's shares have lost 4.5% over the past month, slightly better than the industry's 4.9% dip but worse than the broader Consumer Staples' 4.3% decline [15] - The company remains cautious about U.S. consumer trends and category growth rates as it heads into the fourth quarter, despite some improvement in consumption during September and October [17] - The company's strong brand equity and pricing power allow it to pass on cost increases to consumers with minimal impact on demand, as evidenced by its robust performance in the third quarter of 2024 [19]