Church & Dwight Co., Inc. (CHD): Should Investors Follow Insiders Into This Consumer Giant?

Page 1 of 2

At the end of June, several independent directors of Church & Dwight Co., Inc. (NYSE:CHD) purchased more than 7,700 shares of the company at around $61.70 per share with the total transaction worth more than $476,000. Since the beginning of the year, Church & Dwight has gained nearly 15.3% on the market, a bit higher than the S&P 500’s return of 14.4%. Should investors follow those independent directors into Church & Dwight now? Let’s find out.

Church & Dwight Co., Inc. (NYSE:CHD)

Business snapshot

Church & Dwight Co., Inc. (NYSE:CHD) has a long operating history, dated back to 1846, manufacturing a wide range of household, personal care and specialty products under eight “power brands” including Arm & Hammer, Trojan condoms, OxiClean stain removers and Xtra laundry detergent. The company operates in three main business segments: Consumer Domestic, Consumer International and Specialty Chemical Products, or SPD.

Most of its operating income, $428.8 million, or 79% of the total profit, was generated from the Consumer Domestic segment, while the Consumer International and the SPD segment contributed only $71 million and $33.8 million, respectively, in operating income. The company had quite a concentrated customer base, with three customers accounting for 34% of the total sales in 2012. Wal-Mart is its largest customer, representing as much as 24% of its total 2012 revenue.

The cash cow with consistent growth and conservative capital structure

What I really like about the company is its consistent growth in both top line and bottom line. Its revenue has increased from more than $1 billion in 2003 to more than $2.9 billion in 2012, while the net income rose from $81 million to $350 million during the same period.

The dividend has also followed the same rising trend, climbing from $0.10 per share to $0.96 per share in the past ten years. Church & Dwight Co., Inc. (NYSE:CHD) is also considered to have great cash flow generating capabilities, with growing free cash flow. In 2012, the operating cash flow was $524 million and the free cash flow came in at $449 million.

Investors might find safety in investing in the company for the long-run, as it employed quite conservative capital structure. As of March 2013, it had $279 million in cash and short-term investments, more than $2 billion in equity, and only $853 million in both long and short-term debt. It also booked $466 million in deferred tax liabilities, which could be considered an interest-free loan from the government.

How about Clorox and P&G?

However, the market seems to value the company quite expensively. At $61.70 per share, Church & Dwight Co., Inc. (NYSE:CHD)is worth $8.5 billion on the market. The market values the company at as much as 19.85 times its forward earnings.

Page 1 of 2

Dividend Stock Alert - Billionaire Robbins' Top Dividend Idea With 70% Upside Potential

Get Paid 3.5% Per Year While Waiting For The Stock Appreciate 70%

Larry Robbins' Glenview Capital Opportunity Fund returned 101.7% in 2013 and Robbins personally made $750 million. The same fund returned 25.3% in 2014. In this FREE REPORT we will share Robbins' top dividend idea that yields 3.5% and has been increasing its dividends for 39 consecutive years. Robbins thinks the stock has the potential to appreciate 70%.

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!