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Zacks Rank #5 (Strong Sell) stock Clorox ((CLX - Free Report) ) is a prominent multinational consumer goods company specializing in the development, production, and marketing of a broad range of household and professional products. Founded in 1913, Clorox is among the most trusted consumer brands globally, and is best known for its cleaning and disinfecting products, namely bleach and disinfecting wipes, which fall under the flagship Clorox brand. In addition to household cleaners, Clorox manufactures a diverse array of products, such as healthcare and personal care items, lifestyle solutions, and natural cleaning products.
Sophisticated Cyber Attack Disrupts Operations
Early last month, Clorox informed investors it expects to post a first-quarter loss after a cyberattack in August led to wide-ranging operational disruptions. The sophisticated cyber-attack was so successful that it impacted other public companies such as casino operator MGM Resorts ((MGM - Free Report) ). While the cyber-attack affected this quarter’s earnings, it may have further impacts to supply chain and product output beyond this quarter.
Beaten Down, Yet Overvalued
Clorox has a reputation as being a value stock. However, to be a true value stock, CLX must be undervalued. Clorox’s p/e ratio is 24.17x, which is above the S&P 500’s 24.17.
Image Source: Zacks Investment Research
What’s worse is that the company has negative quarterly EPS growth of 47% and negative revenue growth of 20%. In other words, Clorox’s lackluster growth does not make up for its above-average valuation.
Image Source: Zacks Investment Research
Investment Opportunity Cost
Many investors will own a stock like Clorox for its juicy dividend. However, CLX’s falling stock price has outweighed any dividend gains. Furthermore, as investors, we each have limited resources to invest. With the Nasdaq, S&P 500 Index, and Russell 2000 Index showing clear signs of a bottom, there are much better areas to allocate money to than “Old Economy” stocks.
Image Source: Zacks Investment Research
Bottom Line an
Clorox is facing significant challenges after a sophisticated cyber-attack disrupted its operations. Despite its reputation as a value stock, CLX’s overvaluation, negative quarterly EPS growth, and declining stock prices are concerning.
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Bear of the Day: Clorox (CLX)
Company Overview.
Zacks Rank #5 (Strong Sell) stock Clorox ((CLX - Free Report) ) is a prominent multinational consumer goods company specializing in the development, production, and marketing of a broad range of household and professional products. Founded in 1913, Clorox is among the most trusted consumer brands globally, and is best known for its cleaning and disinfecting products, namely bleach and disinfecting wipes, which fall under the flagship Clorox brand. In addition to household cleaners, Clorox manufactures a diverse array of products, such as healthcare and personal care items, lifestyle solutions, and natural cleaning products.
Sophisticated Cyber Attack Disrupts Operations
Early last month, Clorox informed investors it expects to post a first-quarter loss after a cyberattack in August led to wide-ranging operational disruptions. The sophisticated cyber-attack was so successful that it impacted other public companies such as casino operator MGM Resorts ((MGM - Free Report) ). While the cyber-attack affected this quarter’s earnings, it may have further impacts to supply chain and product output beyond this quarter.
Beaten Down, Yet Overvalued
Clorox has a reputation as being a value stock. However, to be a true value stock, CLX must be undervalued. Clorox’s p/e ratio is 24.17x, which is above the S&P 500’s 24.17.
Image Source: Zacks Investment Research
What’s worse is that the company has negative quarterly EPS growth of 47% and negative revenue growth of 20%. In other words, Clorox’s lackluster growth does not make up for its above-average valuation.
Image Source: Zacks Investment Research
Investment Opportunity Cost
Many investors will own a stock like Clorox for its juicy dividend. However, CLX’s falling stock price has outweighed any dividend gains. Furthermore, as investors, we each have limited resources to invest. With the Nasdaq, S&P 500 Index, and Russell 2000 Index showing clear signs of a bottom, there are much better areas to allocate money to than “Old Economy” stocks.
Image Source: Zacks Investment Research
Bottom Line an
Clorox is facing significant challenges after a sophisticated cyber-attack disrupted its operations. Despite its reputation as a value stock, CLX’s overvaluation, negative quarterly EPS growth, and declining stock prices are concerning.