Church & Dwight (CHD) Third Quarter Results Ahead: Key Items to Note – October 26, 2022


Church & Dwight Co., Inc. (CHD Free Report) is likely to record a decline in revenue and net income compared to the reading of the respective fiscal quarter of the previous year when it reports third quarter 2022 results October 28. Zacks’ consensus estimate for quarterly revenue is pegged at $1.3 trillion, suggesting a 0.9% decline from the reported figure for the prior year’s fiscal quarter.

Zacks’ consensus estimate for quarterly earnings was flat for the past 30 days at 65 cents per share, indicating an 18.8% decline from the figure in the fiscal quarter a year earlier.

The consumer products company has a four-quarter earnings surprise of 9.8% on average. CHD recorded a profit surprise of around 7% in the last reported quarter.

Factors to Consider

Church & Dwight has witnessed a decline in gross margin in recent quarters.

On its second-quarter earnings call, Church & Dwight said it now expects additional cost inflation of $135 million in 2022, up $50 million from its earlier expectations. The additional inflation is primarily associated with raw materials and packaging materials and the pass-through of similar costs from third-party manufacturers.

The company is undertaking price and productivity efforts to counter inflation, but inflation is expected to outpace prices and productivity in 2022. The year 2022, as well as the third quarter, should see lower gross margins from the respective levels of the period a year ago.

Additionally, management expects a significant increase in dollar marketing spend in the second half of 2022 compared to the first half. Such aspects raise concerns for the reportable quarter.

Church & Dwight enjoyed strong demand. The company posted consumer gains in 11 of 17 national categories in the last quarter. Another factor that works for Church & Dwight is the online channel. Gains from takeovers like Zicam and Therabreath also helped.

However, the company expects robust consumption of value detergents in the second half of 2022 to be offset by slowness in discretionary brands like Waterpik and Flawless and reduced consumption growth in the vitamin category.

For the third quarter of 2022, CHD expects an increase of around 2-4% in reported sales. Organic sales are estimated to be up nearly 1-3%. The organic sales view indicates a slowdown in discretionary brands like Waterpik and Flawless and a tough comparison for vitamins with the peak led by the Delta variant from the previous year.

EPS is projected at 65 cents in the third quarter. This suggests a 19% decline from the prior year quarter adjusted figure due to inflation, high planned SG&A spending and promotional spending.

What the Zacks Model Reveals

Our proven model does not conclusively predict an earnings beat for Church & Dwight this time around. The combination of a positive ESP Earnings and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chance of a win beat, which is not the case here.

Church & Dwight has a Zacks #3 ranking and an ESP gain of -0.00%. You can discover the best stocks to buy or sell before they’re flagged with our Income ESP filter.

Actions with favorable combination

Here are a few companies to consider as our model shows they have the right combination of elements to beat earnings this season.

The Hershey Company (HSY Free Report) currently has an Earnings ESP of +1.94% and a Zacks Rank #3. HSY will likely see improved revenue when it releases Q3 2022 numbers. You can see the full list of today’s Zacks #1 Rank stocks here.

The Zacks consensus estimate for Hershey’s quarterly revenue is pegged at $2.6 billion, indicating a 10.5% improvement over the figure reported in the prior year’s fiscal quarter.

Zacks’ consensus estimate for quarterly EPS of $2.07 suggests a decline of 1.4% from the figure reported in the prior year’s fiscal quarter. HSY has an earnings surprise for the last four quarters of 8.7% on average.

Beyond meat (BYND Free Report) currently has an Earnings ESP of +1.36% and a Zacks Rank of 3. BYND is likely to experience a decline in revenue from the prior quarter’s reported number when it releases results. of the third quarter of 2022.

The consensus rating for Beyond Meat’s net income declined by a penny over the past 30 days to a loss of $1.10 per share. A loss of 87 cents was reported in the prior year fiscal quarter.

Kellogg Company (K Free Report) currently has a Revenue ESP of +1.85% and a Zacks Rank of 3. K is expected to see revenue growth when it reports Q3 2022 numbers.

Zacks’ consensus estimate for Kellogg’s quarterly revenue is pegged at $3.8 billion, suggesting nearly 4% growth from the reported figure for the year-ago quarter.

Zacks’ consensus estimate for Kellogg’s quarterly earnings has been flat for the past 30 days at 96 cents per share, suggesting an 11.9% drop from the year-ago quarter tally. K has posted a 13.3% profit beat, on average, over the past four quarters.

Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.

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