With 8.3% Earnings Growth, Did Church & Dwight Co., Inc. (NYSE:CHD) Outperform The Industry?
Examining Church & Dwight Co., Inc.'s (NYSE:CHD) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CHD's latest performance announced on 31 December 2019 and weigh these figures against its longer term trend and industry movements.
See our latest analysis for Church & Dwight
How CHD fared against its long-term earnings performance and its industry
CHD's trailing twelve-month earnings (from 31 December 2019) of US$616m has increased by 8.3% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 12%, indicating the rate at which CHD is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Church & Dwight has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 10% exceeds the US Household Products industry of 7.2%, indicating Church & Dwight has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Church & Dwight’s debt level, has declined over the past 3 years from 22% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 52% to 78% over the past 5 years.
What does this mean?
Though Church & Dwight's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Church & Dwight to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CHD’s future growth? Take a look at our free research report of analyst consensus for CHD’s outlook.
Financial Health: Are CHD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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