Church & Dwight Earnings: Volumes Buck Trend but Headwinds Loom; Shares Far From a Bargain

We don’t expect much change to our $67 fair value estimate for no-moat Church & Dwight after unpacking first-quarter results. But with shares trading at nearly a 60% premium to our intrinsic valuation, we’d caution investors to remain on the sidelines. From where we sit, the market doesn’t have any regard for the competitive and macro headwinds that could knock the wind out of Church’s sails. In this vein, we think the stock is priced for perfection, implying 7% average annual sales growth and 23% average operating margins versus our 3.5% and less than 20% respective forecasts—aggressive aims in a mature and intensely competitive market.