Church & Dwight Co., Inc. (CHD) develops, manufactures, and markets a broad range of consumer goods. CHD’s 2019 sales accounted for: Household Products (42%), Personal Care (34%), Consumer International (17%), and Specialty Care (7%). Church & Dwight’s brands include ARM & HAMMER, Trojan, OxiClean, SpinBrush, First Response, Nair, Orajel, XTRA, L’il Critters, VitaFusion, Simply Saline, Flawless, Batiste, and Waterpik. This week, I fundamentally analyze CHD’s stock. I review Church & Dwight ‘s operating segments, key ratios, derive the intrinsic value using Discounted Cash Flow (DCF) analysis, and look at expected rate of return from this investment. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Earnings per Share, Book Value, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc. I also compare Church & Dwight ‘s current valuation to that of S&P 500.
After taking into account the 2020 free cash flow of $891 million figure, a 6% growth rate of FCF (growth for the next 10 years), 10% discount rate, 4% long term growth rate (growth from 10 year mark to perpetuity), 252 million shares outstanding, and $1,813 million of long term debt, the DCF analysis yields us an intrinsic value of $62.59 per share. If we decrease the discount rate from 10% to 8%, CHD’s intrinsic value comes to $99.60 per share. Using the current stock price of about $80 per share, and taking into the shares outstanding and future projects of free cash flows, we get the annual expected rate of return of 4.9% if we hold this security through 2045.
0:30 Operating Segments
3:30 Key Ratios Analysis
13:54 Discounted Cash Flow Analysis / Intrinsic Value
16:04 Expected Rate of Return Calculation
17:06 Summary / Conclusion
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CHD’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
Church & Dwight Co., Inc., is a major American manufacturer of household products that is headquartered in Ewing, New Jersey. While it manufactures many items, it is best known for its Arm & Hammer line which includes baking soda and a variety of products made with it, including laundry detergent.
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