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Clorox Stock Rises 22% in Three Months: Is it a Buy or Time to Hold?
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The Clorox Company (CLX - Free Report) has continued its upward trajectory, with its stock remaining close to its 52-week high, driven by strong fundamentals and ongoing strategic initiatives. This impressive performance can be attributed to a solid innovation pipeline, digital transformation, and pricing and cost-saving initiatives.
The Oakland-based company has experienced a remarkable surge in its stock price in the past three months. This Zacks Rank #3 (Hold) stock has gained 22.9%, comfortably outpacing the Zacks Soap and Cleaning Materials industry’s growth of 6.9%. Clorox's unmatched scale and operational capabilities have also helped it outperform the broader Consumer Staples sector and the S&P 500 index, which posted respective gains of 7.6% and 2.5%.
Closing at $161.37 yesterday, shares of Clorox are currently trading near the 52-week high of $169.09 attained on Sept. 16, 2024. Also, the stock has exceeded its 200-day and 50-day simple moving average, highlighting a sustained upward trend.
Image Source: Zacks Investment Research
Reflecting the positive sentiment around Clorox, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates by 0.3% to $6.64 and next fiscal year by 0.7% to $7.03 per share. These estimates indicate expected year-over-year growth rates of around 7.6% and 5.8%, respectively.
Image Source: Zacks Investment Research
Growth Strategies to Bolster CLX’s Performance
Clorox has been making notable progress with the IGNITE strategy, which includes the long-term financial goals of 2-4% net sales growth, EBIT margin expansion of 25-50 basis points, and free cash flow generation of 11-13% of sales. This initiative focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation in each area of business.
To streamline operations and ensure long-term competitiveness, Clorox introduced Reimagine Work, a crucial component of the IGNITE strategy. This initiative focuses on simplifying the organization and improving agility, resulting in a new operating model that has already been implemented. It is projected to generate $100 million in annual cost savings, driving greater operational efficiency across the company.
The company’s operating model helps to increase efficiencies and transform its operations in the areas of supply chain, digital commerce, innovation and brand building over the long term. Clorox has been strengthening its competitive advantage, accelerating profitable growth and preparing for long-term success while recovering from the cyberattack witnessed earlier in the year.
Clorox’s international business holds significant promise for long-term growth, as the company makes strides in its core markets. Through its Go Lean strategy, Clorox is effectively driving profitable growth by streamlining operations and focusing on efficient resource allocation. Driven by its IGNITE Strategy, which aims to improve profitability in International business, the company expects to invest selectively in profitable platforms.
Clorox plans to invest $500 million in transformative technologies over the next few years, upgrading its ERP system and transitioning to a cloud-based platform. Of this amount, 55% will be recorded as incremental operating costs within selling and administrative expenses, which will adjust reported earnings per share. About 70% of these costs are tied to the ERP implementation, with the remainder for other technology upgrades.
Clorox Stock’s Roadblocks
Clorox has encountered challenges from persistent inflation and changing market conditions, leading to a 6% year-over-year decline in net sales in fourth-quarter fiscal 2024. This downside is attributed to an unfavorable price mix, lower volumes and the impact of the divestiture of the Argentina business. On an organic basis also, sales fell 3% year over year.
Clorox has been accelerating investments to enhance digital capabilities. For fiscal 2025, management anticipates selling and administrative expenses between 15% and 16% of net sales, indicating an estimated 150-basis point impact of strategic investments in digital capabilities and productivity enhancements.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Sprouts Farmers (SFM - Free Report) , engaged in retailing fresh, natural and organic food products, currently sports a Zacks Rank #2. SFM has a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of around 9.6% and 18.7%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings calls for growth of around 1% and 5%, respectively, from the year-ago reported numbers.
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Clorox Stock Rises 22% in Three Months: Is it a Buy or Time to Hold?
The Clorox Company (CLX - Free Report) has continued its upward trajectory, with its stock remaining close to its 52-week high, driven by strong fundamentals and ongoing strategic initiatives. This impressive performance can be attributed to a solid innovation pipeline, digital transformation, and pricing and cost-saving initiatives.
The Oakland-based company has experienced a remarkable surge in its stock price in the past three months. This Zacks Rank #3 (Hold) stock has gained 22.9%, comfortably outpacing the Zacks Soap and Cleaning Materials industry’s growth of 6.9%. Clorox's unmatched scale and operational capabilities have also helped it outperform the broader Consumer Staples sector and the S&P 500 index, which posted respective gains of 7.6% and 2.5%.
Closing at $161.37 yesterday, shares of Clorox are currently trading near the 52-week high of $169.09 attained on Sept. 16, 2024. Also, the stock has exceeded its 200-day and 50-day simple moving average, highlighting a sustained upward trend.
Image Source: Zacks Investment Research
Reflecting the positive sentiment around Clorox, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates by 0.3% to $6.64 and next fiscal year by 0.7% to $7.03 per share. These estimates indicate expected year-over-year growth rates of around 7.6% and 5.8%, respectively.
Image Source: Zacks Investment Research
Growth Strategies to Bolster CLX’s Performance
Clorox has been making notable progress with the IGNITE strategy, which includes the long-term financial goals of 2-4% net sales growth, EBIT margin expansion of 25-50 basis points, and free cash flow generation of 11-13% of sales. This initiative focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation in each area of business.
To streamline operations and ensure long-term competitiveness, Clorox introduced Reimagine Work, a crucial component of the IGNITE strategy. This initiative focuses on simplifying the organization and improving agility, resulting in a new operating model that has already been implemented. It is projected to generate $100 million in annual cost savings, driving greater operational efficiency across the company.
The company’s operating model helps to increase efficiencies and transform its operations in the areas of supply chain, digital commerce, innovation and brand building over the long term. Clorox has been strengthening its competitive advantage, accelerating profitable growth and preparing for long-term success while recovering from the cyberattack witnessed earlier in the year.
Clorox’s international business holds significant promise for long-term growth, as the company makes strides in its core markets. Through its Go Lean strategy, Clorox is effectively driving profitable growth by streamlining operations and focusing on efficient resource allocation. Driven by its IGNITE Strategy, which aims to improve profitability in International business, the company expects to invest selectively in profitable platforms.
Clorox plans to invest $500 million in transformative technologies over the next few years, upgrading its ERP system and transitioning to a cloud-based platform. Of this amount, 55% will be recorded as incremental operating costs within selling and administrative expenses, which will adjust reported earnings per share. About 70% of these costs are tied to the ERP implementation, with the remainder for other technology upgrades.
Clorox Stock’s Roadblocks
Clorox has encountered challenges from persistent inflation and changing market conditions, leading to a 6% year-over-year decline in net sales in fourth-quarter fiscal 2024. This downside is attributed to an unfavorable price mix, lower volumes and the impact of the divestiture of the Argentina business. On an organic basis also, sales fell 3% year over year.
Clorox has been accelerating investments to enhance digital capabilities. For fiscal 2025, management anticipates selling and administrative expenses between 15% and 16% of net sales, indicating an estimated 150-basis point impact of strategic investments in digital capabilities and productivity enhancements.
Don’t Miss These Solid Bets
The Chefs' Warehouse (CHEF - Free Report) is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Sprouts Farmers (SFM - Free Report) , engaged in retailing fresh, natural and organic food products, currently sports a Zacks Rank #2. SFM has a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of around 9.6% and 18.7%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings calls for growth of around 1% and 5%, respectively, from the year-ago reported numbers.