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Clorox Gains 20.5% in Past Six Months: Time to Buy or Hold the Stock?
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The Clorox Company (CLX - Free Report) stock has been trending up the charts in the past six months, recording a gain of 20.5%. This gain comfortably outpaces the broader Consumer Staples sector’s rise of 3.2% and the Zacks Consumer Products - Staples industry’s growth of 2.2% in the same period. CLX’s shares also surpassed the S&P 500 index’s appreciation of 11.8% in the six-month time period.
The company has been gaining from pricing and cost-saving initiatives, which have been boosting the gross margins for a while. Its efforts to expand its international foothold also bodes well.
Currently priced at $164.41, CLX stock is trading at 4.1% to its 52-week high of $171.37, reached on Dec. 6. However, it is trading at a 28.8% premium to its 52-week low mark.
CLX’s Strategies Aid
Clorox has been strengthening its competitive advantage, accelerating profitable growth and preparing for long-term success, while also recovering from the cyber-attack seen earlier in the year. It has fully restored its distribution capabilities and reclaimed the majority of lost market share. This recovery was driven by a revitalized supply chain and robust merchandising efforts across its portfolio.
Clorox’s pricing and cost-saving initiatives have been bolstering margins. CLX delivered the eighth consecutive quarter of gross margin expansion in first-quarter fiscal 2025, backed by substantial cost savings and a comprehensive margin-management program. The company has been on track with its streamlined operating model, which aims to improve efficiency. This led to a gross margin expansion of 740 basis points year over year in the reported quarter. Additionally, the company remains on track to fully restore the gross margin by fiscal 2025.
CLX's Price Performance
Image Source: Zacks Investment Research
The company is quite focused on advancing its transformation to become strong and resilient. Clorox divested its Better Health Vitamins, Minerals and Supplements VMS business in the reported quarter. This divestiture aligns with its strategy to concentrate on its core areas, potentially unlocking further value for shareholders. This highlights an important step in the evolution of its portfolio, supporting CLX’s target to lower volatility and boost profitable growth.
CLX is progressing well as it restored overall market share, increased share across the majority of its categories and delivered results above expectations during the reported quarter. Clorox is focused on value creation in the long run. The company’s holistic margin-management efforts have been boosting growth and it is on track to revert to pre-pandemic gross margins by fiscal 2025 while investing in the business. Hence, it concentrates on offering superior value to consumers via investing in its brands and making innovations.
Management continues to explore international opportunities. Excluding the divestiture of the Argentina business and the impacts of adverse currency rates, the international segment’s organic sales rose 11% in first-quarter fiscal 2025, supported by 11 points of volume growth. Segment-adjusted EBIT rose 3% due to volume growth, excluding the Argentina business. Going forward, this segment is likely to continue performing well and boost the company’s overall results.
Estimate Revisions Trend Upward for CLX
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for Clorox’s fiscal 2025 earnings per share (EPS) has increased 3.2%. The consensus estimate for fiscal 2026 EPS has risen 2% in the past 60 days.
Image Source: Zacks Investment Research
For fiscal 2025, the Zacks Consensus Estimate for CLX’s EPS implies 11% growth year over year. For fiscal 2026, the consensus mark for sales and EPS indicates a 2.2% and 4.7% year-over-year increase, respectively.
Bumps in Clorox’s Growth Path
Clorox has been witnessing higher advertising expenses for a while now. In first-quarter fiscal 2025, advertising expenses rose 21.8% year over year to $201 million. For fiscal 2025, advertising and sales promotion spending is projected to be 11-11.5% of net sales, due to CLX’s continued commitment to brand investment.
Selling and administrative expenses are predicted to be between 15% and 16% of net sales, indicating a 150-basis point impact of strategic investments in digital capabilities and productivity enhancements. Of the total investment in digital capabilities, the company will record 70% as incremental operating costs within selling and administrative expenses.
Management highlighted that the company has been witnessing an uncertain macro landscape, where consumers remain under pressure. Clorox expects fiscal 2025 net sales to be flat to decline 2% from the prior year’s actual.
CLX’s Valuation
Clorox’s stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 23.49 on a forward 12-month basis, higher than 22.04 for the industry.
Conclusion
Clorox has been making initiatives to tackle challenges. The company is on track with the IGNITE strategy, which mainly focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation in each area of business.
Management announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. This new structure is expected to generate ongoing annual cost savings of approximately $100 million, significantly enhancing operational efficiency. The upward revisions in its earnings estimates further speak of CLX’s positives. The stock currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.3% and 224.3%, respectively, from the prior-year levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The consensus estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 27.3% and 88.1%, respectively, from the prior-year levels.
VITL has a trailing four-quarter average earnings surprise of 48.5%.
McCormick & Company (MKC - Free Report) , manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter average earnings surprise of 13.8%.
The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 0.6% and 8.2%, respectively, from the year-ago figures.
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Clorox Gains 20.5% in Past Six Months: Time to Buy or Hold the Stock?
The Clorox Company (CLX - Free Report) stock has been trending up the charts in the past six months, recording a gain of 20.5%. This gain comfortably outpaces the broader Consumer Staples sector’s rise of 3.2% and the Zacks Consumer Products - Staples industry’s growth of 2.2% in the same period. CLX’s shares also surpassed the S&P 500 index’s appreciation of 11.8% in the six-month time period.
The company has been gaining from pricing and cost-saving initiatives, which have been boosting the gross margins for a while. Its efforts to expand its international foothold also bodes well.
Currently priced at $164.41, CLX stock is trading at 4.1% to its 52-week high of $171.37, reached on Dec. 6. However, it is trading at a 28.8% premium to its 52-week low mark.
CLX’s Strategies Aid
Clorox has been strengthening its competitive advantage, accelerating profitable growth and preparing for long-term success, while also recovering from the cyber-attack seen earlier in the year. It has fully restored its distribution capabilities and reclaimed the majority of lost market share. This recovery was driven by a revitalized supply chain and robust merchandising efforts across its portfolio.
Clorox’s pricing and cost-saving initiatives have been bolstering margins. CLX delivered the eighth consecutive quarter of gross margin expansion in first-quarter fiscal 2025, backed by substantial cost savings and a comprehensive margin-management program. The company has been on track with its streamlined operating model, which aims to improve efficiency. This led to a gross margin expansion of 740 basis points year over year in the reported quarter. Additionally, the company remains on track to fully restore the gross margin by fiscal 2025.
CLX's Price Performance
Image Source: Zacks Investment Research
The company is quite focused on advancing its transformation to become strong and resilient. Clorox divested its Better Health Vitamins, Minerals and Supplements VMS business in the reported quarter. This divestiture aligns with its strategy to concentrate on its core areas, potentially unlocking further value for shareholders. This highlights an important step in the evolution of its portfolio, supporting CLX’s target to lower volatility and boost profitable growth.
CLX is progressing well as it restored overall market share, increased share across the majority of its categories and delivered results above expectations during the reported quarter. Clorox is focused on value creation in the long run. The company’s holistic margin-management efforts have been boosting growth and it is on track to revert to pre-pandemic gross margins by fiscal 2025 while investing in the business. Hence, it concentrates on offering superior value to consumers via investing in its brands and making innovations.
Management continues to explore international opportunities. Excluding the divestiture of the Argentina business and the impacts of adverse currency rates, the international segment’s organic sales rose 11% in first-quarter fiscal 2025, supported by 11 points of volume growth. Segment-adjusted EBIT rose 3% due to volume growth, excluding the Argentina business. Going forward, this segment is likely to continue performing well and boost the company’s overall results.
Estimate Revisions Trend Upward for CLX
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for Clorox’s fiscal 2025 earnings per share (EPS) has increased 3.2%. The consensus estimate for fiscal 2026 EPS has risen 2% in the past 60 days.
Image Source: Zacks Investment Research
For fiscal 2025, the Zacks Consensus Estimate for CLX’s EPS implies 11% growth year over year. For fiscal 2026, the consensus mark for sales and EPS indicates a 2.2% and 4.7% year-over-year increase, respectively.
Bumps in Clorox’s Growth Path
Clorox has been witnessing higher advertising expenses for a while now. In first-quarter fiscal 2025, advertising expenses rose 21.8% year over year to $201 million. For fiscal 2025, advertising and sales promotion spending is projected to be 11-11.5% of net sales, due to CLX’s continued commitment to brand investment.
Selling and administrative expenses are predicted to be between 15% and 16% of net sales, indicating a 150-basis point impact of strategic investments in digital capabilities and productivity enhancements. Of the total investment in digital capabilities, the company will record 70% as incremental operating costs within selling and administrative expenses.
Management highlighted that the company has been witnessing an uncertain macro landscape, where consumers remain under pressure. Clorox expects fiscal 2025 net sales to be flat to decline 2% from the prior year’s actual.
CLX’s Valuation
Clorox’s stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 23.49 on a forward 12-month basis, higher than 22.04 for the industry.
Conclusion
Clorox has been making initiatives to tackle challenges. The company is on track with the IGNITE strategy, which mainly focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation in each area of business.
Management announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. This new structure is expected to generate ongoing annual cost savings of approximately $100 million, significantly enhancing operational efficiency. The upward revisions in its earnings estimates further speak of CLX’s positives. The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter average earnings surprise of 132.9%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.3% and 224.3%, respectively, from the prior-year levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The consensus estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 27.3% and 88.1%, respectively, from the prior-year levels.
VITL has a trailing four-quarter average earnings surprise of 48.5%.
McCormick & Company (MKC - Free Report) , manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter average earnings surprise of 13.8%.
The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 0.6% and 8.2%, respectively, from the year-ago figures.