S&P Global Ratings on Monday revised its outlook on Church & Dwight Co. Inc. to positive from stable and reaffirmed the company's 'BBB+' long-term rating and 'A-2' short-term rating. The action reflects S&P's view that Church & Dwight has sustained a conservative leverage profile while pursuing measured acquisitions and buybacks.
The ratings firm noted that Church & Dwight has kept its S&P Global Ratings-adjusted leverage below 2x for the past three years. That track record, together with the company's capital activity, underpins the agency's expectation that the company could be eligible for a higher rating within the next 12-24 months if it continues to produce strong free operating cash flow to debt and maintains leverage at or below the low-2x level.
Specific balance-sheet metrics cited by S&P include a leverage ratio of 1.1x as of Dec. 31, 2024 and a pro forma leverage of about 1.7x as of March 31, 2026 when adjusted for recent acquisitions. S&P said the outlook upgrade to positive reflects the potential for a rating upgrade if Church & Dwight sustains free operating cash flow to debt above 25% while keeping adjusted leverage near or below the low-2x area.
Church & Dwight's recent capital allocation includes $900 million in gross share repurchases in 2025 and acquisition spending described by S&P as up to $880 million for Touchland, followed by the $325 million Miss Mouth's transaction in 2026. The ratings agency anticipates the company will continue to execute modest, targeted acquisitions and opportunistic share repurchases, keeping adjusted leverage generally in the high-1x to low-2x band.
In its base-case projection, S&P assumes moderately-sized acquisitions of $750 million and annual gross share repurchases of $500 million beginning in 2027. The agency expects that combination of investment and repurchases to leave leverage within the previously mentioned range.
S&P also discussed the company's brand portfolio and recent portfolio moves. Church & Dwight has refined its brand mix over recent years by exiting slower-moving appliance products and vitamins, and now relies on seven power brands. Arm & Hammer remains a cornerstone brand, holding close to a 80% share of the baking soda market and the largest share in U.S. laundry by volume, according to S&P. The firm highlighted Therabreath and Hero as power brands that have been successful post-acquisition, each growing at double-digit rates.
On the profit and cost side, S&P expects Church & Dwight to report modest S&P Global Ratings-adjusted EBITDA growth of about 2%, despite headwinds. The agency quantified near-term cost pressures at roughly $30 million to $35 million tied to oil-based resins, surfactants, and logistics. S&P expects the company to offset those pressures via expansion of higher-growth brands, productivity program savings, and incremental profits tied to the Miss Mouth's acquisition.
What this means
The upgrade of the outlook to positive does not change the current ratings, but it signals that continued strong cash generation and disciplined leverage management could support a future upgrade. S&P's scenario assumes continued modest acquisition activity and recurring repurchases sustained at assumed levels beginning in 2027.