Here's Why We Think Church & Dwight (NYSE:CHD) Might Deserve Your Attention Today

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

In contrast to all that, many investors prefer to focus on companies like Church & Dwight (NYSE:CHD), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Church & Dwight with the means to add long-term value to shareholders.

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Church & Dwight's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Church & Dwight's EPS shot up from US$2.25 to US$3.26; a result that's bound to keep shareholders happy. That's a fantastic gain of 45%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Church & Dwight reported flat revenue and EBIT margins over the last year. That's not a major concern but nor does it point to the long term growth we like to see.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Check out our latest analysis for Church & Dwight

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Church & Dwight's forecast profits?

Are Church & Dwight Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Although we did see some insider selling (worth US$1.1m) this was overshadowed by a mountain of buying, totalling US$2.9m in just one year. We find this encouraging because it suggests they are optimistic about Church & Dwight'sfuture. We also note that it was the President, Richard Dierker, who made the biggest single acquisition, paying US$1.3m for shares at about US$94.78 each.

Along with the insider buying, another encouraging sign for Church & Dwight is that insiders, as a group, have a considerable shareholding. To be specific, they have US$37m worth of shares. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 0.2%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Rick Dierker, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Church & Dwight, with market caps over US$8.0b, is about US$13m.

The Church & Dwight CEO received total compensation of just US$4.2m in the year to December 2024. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Church & Dwight Deserve A Spot On Your Watchlist?

For growth investors, Church & Dwight's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. You still need to take note of risks, for example - Church & Dwight has 1 warning sign we think you should be aware of.

The good news is that Church & Dwight is not the only stock with insider buying. Here's a list of small cap, undervalued companies in the US with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.