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3 Reasons to Sell CHD and 1 Stock to Buy Instead

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Church & Dwight currently trades at $96.56 per share and has shown little upside over the past six months, posting a middling return of 4.3%. The stock also fell short of the S&P 500’s 17.5% gain during that period.

Is there a buying opportunity in Church & Dwight, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Is Church & Dwight Not Exciting?

We’re passing on Church & Dwight for now. Here are three reasons we avoid CHD, plus one stock we’d rather own.

1. Slow Organic Growth Suggests Waning Demand In Core Business

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.

The demand for Church & Dwight’s products has generally risen over the last two years but lagged behind the broader sector. On average, the company’s organic sales have grown by 2.8% year on year. Church & Dwight Year-On-Year Organic Revenue Growth

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Church & Dwight’s revenue to rise by 2.3%, close to its 3.4% annualized growth for the past three years. This projection doesn’t excite us and suggests its newer products will not accelerate its top-line performance yet.

3. EPS Barely Growing

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Church & Dwight’s unimpressive 3.7% annual EPS growth over the last three years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Church & Dwight Trailing 12-Month EPS (Non-GAAP)

Final Judgment

Church & Dwight’s business quality ultimately falls short of our standards. With its shares underperforming the market lately, the stock trades at 24.5× forward P/E (or $96.56 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at one of our all-time favorite software stocks.

Stocks We Would Buy Instead of Church & Dwight

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