Will This Downgrade Hurt Church & Dwight Inc (CHD) Today?

NEW YORK (TheStreet) -- Church & Dwight Inc (CHD) has been downgraded to "neutral" from "outperform," said Credit Suisse on Wednesday. The firm said the revision was a valuation call, based on a $66 price target. 

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Separately, TheStreet Ratings team rates CHURCH & DWIGHT INC as a Buy with a ratings score of A-. The 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, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • CHD's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 1.6%. 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, 0.40, 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 1.27, which illustrates the ability to avoid short-term cash problems.
  • CHURCH & DWIGHT INC has improved earnings per share by 14.0% 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 $2.78 versus $2.45 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.78).
  • 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 14.1% when compared to the same quarter one year prior, going from $80.80 million to $92.20 million.
  • 47.88% is the gross profit margin for CHURCH & DWIGHT INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.20% trails the industry average.

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