The stock is in a correction mode that presents immediate opportunity for investors to consider this as a long position in their portfolios.
Church & Dwight operates its business in four key segments. The consumer/domestic division offers household products from baking soda, fabric softeners, dish washing, laundry, and cleaning solutions. Personal care products compromise toothpaste, toothbrushes, and associated bathroom and family planning products. The consumer international division markets various personal care and household products. The specialty product division sells specialty chemicals and industrial cleaners.
For the latest quarter ending May 1, 2014, Church & Dwight earned $0.73 per share on revenue of $782 million, falling short of expectations for of $783.34 million in revenue. Global sales volume increased by 4.4% while its gross margin contracted by 150 basis points to 43.4%. Most of the weakness in earnings results was due to increased spending in the marketing of several new products introduced during this quarter. However, Church & Dwight purchased $260M of its shares on the open market while it also paid $42.5M in dividends (CHD’s 453rd consecutive quarterly dividend payment). Its 52 week high was at 70.71 meanwhile its 52 week low was at 56.36. A market cap of $9.23 billion, with earnings per share of 2.76, a P/E ratio of 24.60 with a dividend yield of 1.24(1.80%)
Courtesy Stockcharts.com
The chart shows a technical picture a reflective of correction/retraction. Drop through 50 & 200-DMA. Could find primary support @ (61-62) and secondary support @ (58-59). Reversal to challenge primary resistance @ (66-67) and secondary resistance @ (69-70).
The second quarter’s fiscal year guidance call for a 3% to 4% increase in revenue and earnings of 61 cents per share. During the 2014 fiscal year the company anticipates 7% to 9% earnings growth per share on revenue of about 3% to 4%. Since a majority of spending has been realized in the first half of its fiscal year the company can experience a stronger per share growth in earnings in the second half of 2014.
Cash flow for the latest quarter of $102.4M showed on increase of $30.1M over a year ago. Cash on hand as of 03/31/14 is a@ $300M. Church & Dwight maintained cash and long-term debt at 14% and 31% respectively, which is below the 50% benchmark. This dividend payment is 44% of cash currently at $1.24/share. These shares are trading above the 50 & 200-day moving averages since February. As they approached a new high of 70.71 currently the shares are in a clear correction/retraction mode and could find secondary support @ (63-64).
CHURCH & DWIGHT /CHD/ “NYSE”
TODAY’S PRICE: $65.45
BUYING RANGE: 64-68
NEAR TERM OBJECTIVE: 75
INTER MED OBJECTIVE: 85
STOP LOSS: 61
*Price as of 08/01/14
