CHD

Church & Dwight ($CHD) Executives Shift to Buying After CEO's $62M Sale...Defensive Appeal Emerges

08/06/2025 16:40

Church & Dwight ($CHD) is sending intriguing signals to investors. As this major U.S. consumer goods company has plunged about 15% over the past year, a striking shift in insider trading patterns is emerging. Church & Dwight, with a market cap of $25.1 billion, specializes in household brands familiar to American families including ARM & HAMMER, TROJAN, and OXICLEAN. Founded in 1846, the company produces everything from household products and personal care items to livestock feed additives. Its ARM & HAMMER baking soda brand and TROJAN's dominant position in the condom market represent strong competitive moats in their respective categories. The most notable change appears in insider trading activity. In November 2024, CEO Matthew Farrell executed massive sell-offs over four consecutive days when shares traded between $103-112. He disposed of over 600,000 shares worth $62 million. Other executives followed suit, creating market anxiety with their coordinated selling. However, the situation reversed in 2025. As shares fell nearly 20% to the $91-94 range in May and August, executives began buying. EVP Michael Read purchased 5,000 shares across two transactions in May and August, while President Richard Dierker accumulated 13,334 shares in May. This suggests management views current price levels as attractive. This reversal in insider trading patterns isn't coincidental. Church & Dwight has shown mixed recent performance. Q2 2025 revenue of $1.51 billion declined slightly year-over-year but exceeded analyst expectations. Earnings per share of $0.94 beat consensus by over 10%. While domestic consumer segments showed softness, international sales grew 5.3%, providing balance. Considering current market conditions, management's judgment appears compelling. With Trump administration tariff policies impacting the broader consumer goods sector, Church & Dwight's stock may have declined excessively. While the trailing P/E of 43.59x appears elevated, the forward P/E of 26.04x represents reasonable valuation. Several positive signals warrant investor attention. The company's cash flow generation remains robust, with operating cash flow of $1.07 billion and cash holdings of $923 million providing ample liquidity. Additionally, continued international business growth (5.3%) helps offset domestic market softness. Particularly noteworthy is the defensive nature of the company's brand portfolio. Products like ARM & HAMMER baking soda and TROJAN condoms maintain steady demand regardless of economic conditions. This characteristic results in Church & Dwight's beta of 0.43, indicating lower volatility than the broader market. However, risk factors require attention. Recent recalls of Zicam and Orajel products occurred, and the impact of tariff policies on raw material costs bears monitoring. Additionally, continued softness in domestic consumer segments remains concerning. Analyzing future scenarios, the optimistic case suggests potential recovery to $105-110 levels, aligning with executives' previous selling prices. If international growth continues and domestic markets stabilize, this scenario becomes feasible. The most likely base case involves sideways movement in the $95-100 range, with defensive characteristics supporting gradual recovery amid current economic uncertainty. Conversely, the risk scenario could see further declines to $85-90 if tariff impacts accelerate cost inflation and consumer spending contracts significantly. Ultimately, Church & Dwight presents an attractive investment opportunity at current prices. Recent insider buying supports this assessment. The combination of stable cash flows, strong brand portfolio, and reasonable valuation makes it worth considering for long-term investors.