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BMO Capital Upgrades Church & Dwight (CHD) to "Outperform" (Update)

Stocks in this article: CHD

Update (9:48 a.m.): Updated with Wednesday market open information.

NEW YORK (TheStreet) -- BMO Capital upgraded Church & Dwight  (CHD) to "outperform" from "market perform" and set a $71 price target. The firm cited new products that should help the company continue to grow as reason for the upgrade.

"We like the strategic evolution that lifts the importance of four 'power brands' (Arm & Hammer, Trojan, OxiClean, and Vitafusion/L'il Critters) to 'mega brands' status; it leverages investments in R&D and marketing and lowers organizational costs," BMO wrote in its report. "CHD's 2014 new products may be the strongest in its history."

The stock was falling 0.6% to $63.37 shortly after the market opened on Wednesday.

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Separately, TheStreet Ratings team rates CHURCH & DWIGHT INC as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHURCH & DWIGHT INC (CHD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, increase in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 11.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
  • CHURCH & DWIGHT INC has improved earnings per share by 15.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHURCH & DWIGHT INC increased its bottom line by earning $2.45 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.45).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Household Products industry average, but is less than that of the S&P 500. The net income increased by 14.9% when compared to the same quarter one year prior, going from $93.90 million to $107.90 million.
  • Net operating cash flow has significantly increased by 70.16% to $215.60 million when compared to the same quarter last year. In addition, CHURCH & DWIGHT INC has also vastly surpassed the industry average cash flow growth rate of -15.52%.

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