Is Church & Dwight Co., Inc. (CHD) Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Church & Dwight Co., Inc. (NYSE:CHD) fit the bill? Let’s look at what its recent results tell us about its potential for future gains.

What we’re looking for
The graphs you’re about to see tell Church & Dwight Co., Inc. (NYSE:CHD)’s story, and we’ll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing?

Valuation: Is share price growing in line with earnings per share?

Opportunities: Is return on equity increasing while debt to equity declines?

Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s take a look at Church & Dwight Co., Inc. (NYSE:CHD)’s key statistics:

CHD Total Return Price data by YCharts

Passing Criteria	3-Year* Change	Grade
Revenue growth > 30%	16.9%	Fail
Improving profit margin	18.5%	Pass
Free cash flow growth > Net income growth	60% vs. 38.6%	Pass
Improving EPS	40.2%	Pass
Stock growth (+ 15%) < EPS growth	99.5% vs. 40.2%	Fail

Source: YCharts.
*Period begins at end of Q1 2010.

CHD Return on Equity data by YCharts

Passing Criteria	3-Year* Change	Grade
Improving return on equity	4.3%	Pass
Declining debt to equity	(7.9%)	Pass
Dividend growth > 25%	300%	Pass
Free cash flow payout ratio < 50%	33.7%	Pass

Source: YCharts.
*Period begins at end of Q1 2010.

How we got here and where we’re going
Church & Dwight Co., Inc. (NYSE:CHD) got off to a hot start, but it was tripped up primarily by merely average revenue growth. That isn’t enough to call this stock stale, as C&D still earned seven out of nine possible passing grades regardless, and it has a very good chance to gain a perfect score next time around provided valuations and fundamentals come closer together. How might Church & Dwight Co., Inc. (NYSE:CHD) push its revenue even higher over the next few quarters?