Investment Thesis
Church & Dwight (CHD) delivered a solid Q1 2019 with strong top and bottom lines growth. The company’s FLAWLESS acquisition should help boost its top and bottom lines in 2019 and beyond. However, we expect gross margin pressure to continue in H2 2019 and beyond due to expected increase in commodity and transportation costs. In addition, competition from its peers will limit price increases in 2019. Church & Dwight pays a growing dividend. However, its shares are trading at a premium valuation already. We think investors should wait for a pullback