Church & Dwight Co Inc (CHD, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 96.13, Church & Dwight Co Inc has witnessed a surge of 2.14% over a period, marked against a three-month change of 3.71%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Church & Dwight Co Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Church & Dwight Co Inc's GF Score components are as follows:
- 1. Financial strength rank: 6/10
- 2. Profitability rank: 9/10
- 3. Growth rank: 9/10
- 4. GF Value rank: 5/10
- 5. Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, and momentum, and decent ranks in financial strength and GF value, GuruFocus assigned Church & Dwight Co Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Church & Dwight Co Inc's Business
Church & Dwight Co Inc, with a market cap of $23.65 billion and sales of $5.64 billion, is the leading global producer of baking soda. Beyond baking soda, the products in its portfolio have vast category reach, including laundry products, cat litter, oral care, deodorant, and nasal care, all sold under the Arm & Hammer brand. Its mix also includes Xtra, Trojan, OxiClean, First Response, Nair, L'il Critters/Vitafusion, Orajel, and WaterPik, which together with Arm & Hammer constitute more than 80% of its annual sales and profits. In early 2019, the firm announced the addition of Flawless, which manufactures electric shaving products for women. At the end of 2020, the firm acquired Zicam, a leading brand in the cough/cold-shortening category. Church & Dwight derives more than 80% of its sales from its home market in the U.S.
Financial Strength Breakdown
According to the Financial Strength rating, Church & Dwight Co Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Church & Dwight Co Inc stands impressively at 5.81, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.43, Church & Dwight Co Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Church & Dwight Co Inc's impressive standing among its peers in generating profit. Church & Dwight Co Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Church & Dwight Co Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 8.1%, which outperforms better than 55.58% of 1713 companies in the Consumer Packaged Goods industry.
Conclusion
With its strong financial strength, impressive profitability, and robust growth metrics, Church & Dwight Co Inc stands out as a promising investment opportunity. The GuruFocus Score Rating further highlights the firm's unparalleled position for potential outperformance. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
