Church & Dwight Co., Inc.CHDNYSE

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DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $95.54 per share(market-calibrated)

-7.3%

Upside to Fair Value

Current

$103.02

Pure Model

$94.86

Fair Value

$95.54

Bull Case

$114.35

Bear Case

$78.78

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

2.93%

Calibrated Growth

2.56%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $94.86.

What's Driving This Ratingfor CHD

✓

CapEx already efficient

CapEx at 2.65% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 16.32% — below the sector mature average of 17.37%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.4B (16.32% margin).

→

Moderate revenue growth

Analyst consensus projects -0.98% revenue growth, fading to 2.50% by Year 10. Revenue reaches $8.3B (vs $6.2B today).

✓

Model and market roughly agree

Market-implied terminal growth of 2.93% is close to the model's 2.50% (only 43bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 67.77% indicates efficient cash generation. FCF reaches $1.1B by Year 10 (13.51% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.43

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.42%

Cost of Debt

Pre-tax Cost of Debt4.04%

Tax Rate23.00%

After-tax Cost of Debt3.11%

Equity Weight (E/V)91.90%

Debt Weight (D/V)8.10%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (91.90% × 6.42%) + (8.10% × 3.11%)

= 6.15%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.1B	$6.6B	$7.1B	$7.6B	$8.3B
EBIT	$1.0B	$1.1B	$1.2B	$1.2B	$1.4B
Tax	$231M	$248M	$268M	$287M	$312M
NOPAT	$772M	$829M	$897M	$961M	$1.0B
+ Depreciation	$222M	$239M	$258M	$276M	$300M
- Capex	$163M	$175M	$189M	$203M	$220M
- Δ NWC	-$425,227.625	$2M	$2M	$2M	$1M
Free Cash Flow	$831M	$891M	$964M	$1.0B	$1.1B
Discount Factor	0.942	0.836	0.742	0.659	0.551
Present Value	$783M	$745M	$715M	$680M	$618M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.1B

Terminal Growth Rate2.50%

WACC6.15%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$31.5B

PV of Terminal Value$17.3B

Exit Multiple Method

Year 10 EBITDA$1.7B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$33.1B

PV of Terminal Value$18.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.0B

PV of Terminal Value$17.3B

Enterprise Value$24.4B

(-) Net Debt$1.8B

Equity Value$22.6B

Shares Outstanding243M

Price per Share$93.06

Exit Multiple Method

PV of Projected FCFs$7.0B

PV of Terminal Value$18.2B

Enterprise Value$25.3B

(-) Net Debt$1.8B

Equity Value$23.5B

Shares Outstanding243M

Price per Share$96.67

Pure Model Fair Value

$94.86

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.15%	$129.07	$143.15	$144.28	$138.23	$132.47
5.15%	$103.26	$109.66	$118.47	$131.39	$132.47
6.15%	$86.90	$90.40	$94.86	$100.74	$108.84
7.15%	$75.19	$77.32	$79.91	$83.13	$87.23
8.15%	$66.16	$67.56	$69.20	$71.16	$73.55

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$78.78

-23.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.53

Base Case

$94.86

-7.9% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.43

Bull Case

$114.35

11.0% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.36

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.98%

Year 3 Revenue Growth3.61%

Year 5 Revenue Growth3.91%

Year 7 Revenue Growth3.35%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin16.32%

Terminal EBIT Margin17.37%

Tax Rate23.00%

Historical Capex / Rev2.65%

NWC / Revenue0.70%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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