Shares of Church & Dwight (NYSE: CHD) were moving higher last month after the household-products maker delivered a solid third-quarter earnings report featuring strong organic sales and raised its full-year guidance. As a result, shares of the maker of Arm & Hammer baking soda products and Trojan condoms gained 11% in November, according to data from S&P Global Market Intelligence.
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As you can see from the chart below, essentially all of the stock's gains came at the beginning of the month after its earnings report came out.
Shares of Church & Dwight rose 9% on November 1 as the company reported 4.7% organic sales growth, better than many of its peers, which drove total revenue growth of 7.2% to $1.04 billion. That beat estimates at $1.02 billion.
Gross margin fell 100 basis points to 44.3% due to higher commodities and transportation costs, which led to operating income increasing just 2.8% to $204.2 million. However, the company benefited from a lower tax rate from the Tax Cuts and Jobs Act and adjusted earnings per share increased from $0.49 a year ago to $0.58, topping expectations at $0.54.
CEO Matthew Farrell said, "We were pleased to deliver strong Q3 results, exceeding our outlook of approximately 3% organic sales growth and $0.53 EPS." He noted that the sales grew in 11 of the company's 15 categories and that 7 of its 11 power brands gained market share. It was also the company's second consecutive quarter with sales growth above 5%.
Looking ahead, Church & Dwight raised its guidance for the year, calling for organic sales growth of 4%, up from a previous target of 3.5%, and lifted cash from operations guidance from $690 million to $700 million. The company also maintained revenue growth guidance at 9%, and its EPS outlook at $2.27, up 17% from a year ago. For the fourth quarter, it sees organic sales growth of 3% and adjusted EPS increasing 10% to $0.57.
Shares of Church & Dwight are now up 33% for the year, widely outperforming peers like Procter & Gamble and Colgate Palmolive. That strong performance is a testament to the company's portfolio of brands, smart management, and the advantages of being a smaller company that can continue to gain market share.
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