Intrinsic value of Church & Dwight Company, Inc. - CHD

Previous Close

$79.70

  Intrinsic Value

$43.13

stock screener

  Rating & Target

sell

-46%

Previous close

$79.70

 
Intrinsic value

$43.13

 
Up/down potential

-46%

 
Rating

sell

We calculate the intrinsic value of CHD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  4,312
  4,489
  4,677
  4,876
  5,088
  5,313
  5,550
  5,801
  6,066
  6,346
  6,641
  6,952
  7,280
  7,626
  7,990
  8,373
  8,776
  9,200
  9,646
  10,115
  10,609
  11,128
  11,673
  12,246
  12,849
  13,482
  14,148
  14,847
  15,581
  16,353
Variable operating expenses, $m
  3,458
  3,583
  3,715
  3,855
  4,004
  4,162
  4,329
  4,505
  4,692
  4,888
  4,669
  4,888
  5,119
  5,362
  5,617
  5,887
  6,170
  6,468
  6,782
  7,112
  7,459
  7,824
  8,207
  8,610
  9,034
  9,479
  9,947
  10,438
  10,955
  11,497
Fixed operating expenses, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Total operating expenses, $m
  3,457
  3,582
  3,714
  3,854
  4,003
  4,161
  4,328
  4,504
  4,691
  4,887
  4,668
  4,887
  5,118
  5,361
  5,616
  5,886
  6,169
  6,467
  6,780
  7,110
  7,457
  7,822
  8,205
  8,608
  9,032
  9,477
  9,945
  10,436
  10,953
  11,495
Operating income, $m
  855
  907
  963
  1,022
  1,085
  1,152
  1,222
  1,297
  1,376
  1,459
  1,973
  2,066
  2,163
  2,266
  2,374
  2,487
  2,607
  2,733
  2,866
  3,005
  3,152
  3,306
  3,468
  3,638
  3,817
  4,005
  4,202
  4,410
  4,628
  4,857
EBITDA, $m
  1,376
  1,433
  1,493
  1,556
  1,624
  1,696
  1,771
  1,851
  1,936
  2,025
  2,119
  2,219
  2,323
  2,434
  2,550
  2,672
  2,800
  2,936
  3,078
  3,228
  3,385
  3,551
  3,725
  3,908
  4,100
  4,302
  4,514
  4,737
  4,972
  5,218
Interest expense (income), $m
  26
  114
  122
  130
  139
  148
  158
  169
  180
  192
  204
  218
  231
  246
  262
  278
  295
  313
  332
  352
  373
  395
  418
  443
  469
  496
  524
  554
  585
  618
  653
Earnings before tax, $m
  741
  785
  833
  883
  937
  994
  1,053
  1,117
  1,184
  1,254
  1,756
  1,834
  1,917
  2,004
  2,096
  2,192
  2,294
  2,401
  2,514
  2,632
  2,756
  2,887
  3,025
  3,169
  3,321
  3,481
  3,649
  3,825
  4,010
  4,205
Tax expense, $m
  200
  212
  225
  239
  253
  268
  284
  302
  320
  339
  474
  495
  518
  541
  566
  592
  619
  648
  679
  711
  744
  780
  817
  856
  897
  940
  985
  1,033
  1,083
  1,135
Net income, $m
  541
  573
  608
  645
  684
  725
  769
  815
  864
  916
  1,282
  1,339
  1,399
  1,463
  1,530
  1,600
  1,675
  1,753
  1,835
  1,921
  2,012
  2,108
  2,208
  2,314
  2,424
  2,541
  2,663
  2,792
  2,927
  3,069

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,313
  6,572
  6,847
  7,140
  7,450
  7,778
  8,126
  8,493
  8,882
  9,291
  9,723
  10,179
  10,659
  11,165
  11,698
  12,259
  12,849
  13,470
  14,123
  14,810
  15,533
  16,292
  17,091
  17,930
  18,812
  19,740
  20,714
  21,737
  22,813
  23,943
Adjusted assets (=assets-cash), $m
  6,313
  6,572
  6,847
  7,140
  7,450
  7,778
  8,126
  8,493
  8,882
  9,291
  9,723
  10,179
  10,659
  11,165
  11,698
  12,259
  12,849
  13,470
  14,123
  14,810
  15,533
  16,292
  17,091
  17,930
  18,812
  19,740
  20,714
  21,737
  22,813
  23,943
Revenue / Adjusted assets
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
Average production assets, $m
  2,850
  2,967
  3,091
  3,223
  3,363
  3,512
  3,669
  3,834
  4,010
  4,195
  4,390
  4,595
  4,812
  5,041
  5,281
  5,534
  5,801
  6,081
  6,376
  6,686
  7,012
  7,355
  7,716
  8,095
  8,493
  8,912
  9,352
  9,814
  10,299
  10,809
Working capital, $m
  34
  36
  37
  39
  41
  43
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  103
  108
  113
  119
  125
  131
Total debt, $m
  2,254
  2,409
  2,573
  2,747
  2,932
  3,128
  3,335
  3,554
  3,785
  4,029
  4,287
  4,558
  4,845
  5,146
  5,464
  5,798
  6,150
  6,520
  6,909
  7,319
  7,749
  8,202
  8,678
  9,178
  9,704
  10,256
  10,837
  11,447
  12,088
  12,762
Total liabilities, $m
  3,763
  3,917
  4,081
  4,255
  4,440
  4,636
  4,843
  5,062
  5,293
  5,538
  5,795
  6,067
  6,353
  6,654
  6,972
  7,306
  7,658
  8,028
  8,417
  8,827
  9,257
  9,710
  10,186
  10,686
  11,212
  11,765
  12,345
  12,956
  13,597
  14,270
Total equity, $m
  2,550
  2,655
  2,766
  2,884
  3,010
  3,142
  3,283
  3,431
  3,588
  3,754
  3,928
  4,112
  4,306
  4,511
  4,726
  4,952
  5,191
  5,442
  5,706
  5,983
  6,275
  6,582
  6,905
  7,244
  7,600
  7,975
  8,368
  8,782
  9,216
  9,673
Total liabilities and equity, $m
  6,313
  6,572
  6,847
  7,139
  7,450
  7,778
  8,126
  8,493
  8,881
  9,292
  9,723
  10,179
  10,659
  11,165
  11,698
  12,258
  12,849
  13,470
  14,123
  14,810
  15,532
  16,292
  17,091
  17,930
  18,812
  19,740
  20,713
  21,738
  22,813
  23,943
Debt-to-equity ratio
  0.880
  0.910
  0.930
  0.950
  0.970
  1.000
  1.020
  1.040
  1.050
  1.070
  1.090
  1.110
  1.120
  1.140
  1.160
  1.170
  1.180
  1.200
  1.210
  1.220
  1.230
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.300
  1.310
  1.320
Adjusted equity ratio
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  541
  573
  608
  645
  684
  725
  769
  815
  864
  916
  1,282
  1,339
  1,399
  1,463
  1,530
  1,600
  1,675
  1,753
  1,835
  1,921
  2,012
  2,108
  2,208
  2,314
  2,424
  2,541
  2,663
  2,792
  2,927
  3,069
Depreciation, amort., depletion, $m
  522
  526
  530
  534
  539
  544
  549
  555
  560
  567
  146
  153
  160
  168
  176
  184
  193
  203
  213
  223
  234
  245
  257
  270
  283
  297
  312
  327
  343
  360
Funds from operations, $m
  1,062
  1,099
  1,138
  1,179
  1,223
  1,269
  1,318
  1,370
  1,424
  1,482
  1,428
  1,492
  1,560
  1,631
  1,706
  1,785
  1,868
  1,955
  2,047
  2,144
  2,246
  2,353
  2,465
  2,583
  2,708
  2,838
  2,975
  3,119
  3,271
  3,430
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash from operations, $m
  1,061
  1,098
  1,136
  1,177
  1,221
  1,267
  1,316
  1,368
  1,422
  1,480
  1,426
  1,490
  1,557
  1,628
  1,703
  1,782
  1,865
  1,952
  2,044
  2,140
  2,242
  2,349
  2,461
  2,579
  2,703
  2,833
  2,970
  3,114
  3,265
  3,424
Maintenance CAPEX, $m
  -91
  -95
  -99
  -103
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -146
  -153
  -160
  -168
  -176
  -184
  -193
  -203
  -213
  -223
  -234
  -245
  -257
  -270
  -283
  -297
  -312
  -327
  -343
New CAPEX, $m
  -111
  -117
  -124
  -132
  -140
  -148
  -157
  -166
  -175
  -185
  -195
  -206
  -217
  -228
  -240
  -253
  -266
  -280
  -295
  -310
  -326
  -343
  -361
  -379
  -398
  -419
  -440
  -462
  -486
  -510
Cash from investing activities, $m
  -202
  -212
  -223
  -235
  -247
  -260
  -274
  -288
  -303
  -319
  -335
  -352
  -370
  -388
  -408
  -429
  -450
  -473
  -498
  -523
  -549
  -577
  -606
  -636
  -668
  -702
  -737
  -774
  -813
  -853
Free cash flow, $m
  859
  886
  913
  942
  974
  1,007
  1,042
  1,080
  1,119
  1,161
  1,091
  1,138
  1,187
  1,239
  1,295
  1,353
  1,414
  1,478
  1,546
  1,618
  1,693
  1,772
  1,855
  1,943
  2,035
  2,131
  2,233
  2,340
  2,452
  2,570
Issuance/(repayment) of debt, $m
  147
  154
  164
  174
  185
  196
  207
  219
  231
  244
  258
  272
  286
  301
  317
  334
  352
  370
  389
  409
  431
  453
  476
  500
  526
  553
  581
  610
  641
  673
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  147
  154
  164
  174
  185
  196
  207
  219
  231
  244
  258
  272
  286
  301
  317
  334
  352
  370
  389
  409
  431
  453
  476
  500
  526
  553
  581
  610
  641
  673
Total cash flow (excl. dividends), $m
  1,006
  1,040
  1,077
  1,117
  1,158
  1,203
  1,249
  1,299
  1,351
  1,406
  1,348
  1,409
  1,473
  1,541
  1,612
  1,687
  1,766
  1,848
  1,936
  2,027
  2,123
  2,225
  2,331
  2,443
  2,560
  2,684
  2,814
  2,950
  3,093
  3,244
Retained Cash Flow (-), $m
  -97
  -105
  -111
  -118
  -125
  -133
  -140
  -148
  -157
  -166
  -175
  -184
  -194
  -204
  -215
  -227
  -238
  -251
  -264
  -278
  -292
  -307
  -323
  -339
  -356
  -375
  -394
  -414
  -435
  -456
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  910
  935
  966
  998
  1,033
  1,070
  1,109
  1,150
  1,194
  1,240
  1,174
  1,225
  1,279
  1,336
  1,397
  1,460
  1,527
  1,598
  1,672
  1,750
  1,832
  1,918
  2,008
  2,104
  2,204
  2,309
  2,420
  2,536
  2,659
  2,787
Discount rate, %
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
  863
  838
  812
  783
  752
  717
  680
  640
  598
  555
  464
  424
  384
  344
  304
  266
  230
  196
  164
  135
  110
  88
  69
  53
  40
  29
  21
  15
  10
  7
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Church & Dwight Co., Inc. develops, manufactures and markets a range of household, personal care and specialty products. The Company's segments include Consumer Domestic, Consumer International and Specialty Products Division (SPD). The Company also sells specialty products to industrial customers and distributors. The Consumer Domestic segment includes various brands, as well as other household and personal care products, such as KABOOM cleaning products, ARRID antiperspirant, CLOSE-UP and AIM toothpastes and SIMPLY SALINE nasal saline moisturizer. The Consumer International segment markets a range of personal care products, household and over-the-counter products in international markets, including Canada, France, China, Australia, the United Kingdom, Mexico and Brazil. The Company's SPD segment is a producer of sodium bicarbonate, which it sells together with other specialty inorganic chemicals for various industrial, institutional, medical and food applications.

FINANCIAL RATIOS  of  Church & Dwight Company, Inc. (CHD)

Valuation Ratios
P/E Ratio 44.1
Price to Sales 5.8
Price to Book 10.2
Price to Tangible Book
Price to Cash Flow 30.9
Price to Free Cash Flow 33.5
Growth Rates
Sales Growth Rate 2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.4%
Cap. Spend. - 3 Yr. Gr. Rate -5.7%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 35%
Total Debt to Equity 56.6%
Interest Coverage 28
Management Effectiveness
Return On Assets 11.1%
Ret/ On Assets - 3 Yr. Avg. 10.3%
Return On Total Capital 14.9%
Ret/ On T. Cap. - 3 Yr. Avg. 13.7%
Return On Equity 22.9%
Return On Equity - 3 Yr. Avg. 20.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 45.5%
Gross Margin - 3 Yr. Avg. 44.7%
EBITDA Margin 24%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 20.7%
Oper. Margin - 3 Yr. Avg. 20%
Pre-Tax Margin 20.2%
Pre-Tax Margin - 3 Yr. Avg. 19.3%
Net Profit Margin 13.1%
Net Profit Margin - 3 Yr. Avg. 12.6%
Effective Tax Rate 35%
Eff/ Tax Rate - 3 Yr. Avg. 34.7%
Payout Ratio 39.9%

CHD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHD stock intrinsic value calculation we used $4146 million for the last fiscal year's total revenue generated by Church & Dwight Company, Inc.. The default revenue input number comes from 0001 income statement of Church & Dwight Company, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CHD stock valuation model: a) initial revenue growth rate of 4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.4%, whose default value for CHD is calculated based on our internal credit rating of Church & Dwight Company, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Church & Dwight Company, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CHD stock the variable cost ratio is equal to 80.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $-1 million in the base year in the intrinsic value calculation for CHD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Church & Dwight Company, Inc..

Corporate tax rate of 27% is the nominal tax rate for Church & Dwight Company, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CHD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CHD are equal to 66.1%.

Life of production assets of 34.6 years is the average useful life of capital assets used in Church & Dwight Company, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CHD is equal to 0.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2453.8 million for Church & Dwight Company, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 245.846 million for Church & Dwight Company, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Church & Dwight Company, Inc. at the current share price and the inputted number of shares is $19.6 billion.

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