Clorox
CLX
$86.40
-2.55%
Clorox is a century-old consumer staples manufacturer whose portfolio spans cleaning and disinfecting products (Clorox, Pine-Sol, Tilex, Liquid-Plumr, S.O.S), laundry and household care (Glad trash bags, Fresh Step cat litter, Kingsford charcoal), and lifestyle/food brands (Hidden Valley, KC Masterpiece, Brita, Burt's Bees), with roughly 85% of sales generated in the United States. It is best characterized as a mature, brand-moat-driven category leader in household and personal products rather than a growth company, deriving its competitive identity from shelf-space dominance, pricing power, and a dividend-aristocrat reputation among income investors. The current investor narrative is a contested turnaround and value debate: the stock has fallen to an 11-year low, with headlines framing it as a high-risk, high-reward contrarian play anchored by a dividend yield now above 5%, while skeptics point to a revenue decline of roughly 2% year over year, a recent multi-billion-dollar acquisition that has strained the balance sheet, and a wave of neutral-to-underweight analyst stances. Management's credibility now hinges on whether cost discipline and portfolio reshaping can restore volume growth before the elevated payout ratio and leverage become a structural problem.…
CLX
Clorox
$86.40
Related headlines
Investment Opinion: Should I buy CLX Today?
Rating: Hold. The core thesis is that Clorox is a fairly valued defensive staple with a sustainable but strained dividend, where the risk/reward is balanced but lacks a near-term catalyst. The analyst consensus rating of 'hold' with an average target price of $97.47 (11.9% upside) supports a neutral stance, reflecting the need for operational proof before a re-rating.
Supporting evidence includes the forward PE of 14.15x, which is reasonable for a branded staples company but not deeply discounted given the earnings recovery already priced in. Revenue growth is negative at -2.01% year over year, and gross margin has compressed to 41.27% from 46.48%, highlighting operational challenges. However, the dividend yield of 5.18% is attractive for income investors, and the low beta of 0.574 provides downside protection. Free cash flow of $405 million TTM is positive but modest, and the payout ratio of 102.6% is a red flag. The implied upside to the average target is only 11.9%, which is not compelling relative to the risks.
Key risks that could invalidate the thesis include a dividend cut if cash flow doesn't improve, continued revenue declines, and failure to deleverage. The rating would upgrade to Buy if the company demonstrates two consecutive quarters of volume growth and gross margin stabilization above 43%, or if the forward PE drops below 12x. It would downgrade to Sell if the dividend is cut or if revenue declines accelerate beyond -5%. Valuation verdict: fairly valued relative to its own history and peers, with the market pricing in a modest earnings recovery but not a robust turnaround.
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CLX 12-Month Price Forecast
The 12-month outlook is balanced, with a slight tilt toward the base case given the modest upside to the analyst target and the lack of near-term catalysts. Valuation is fair, but the dividend sustainability and revenue trajectory are key uncertainties. The stock's low beta and brand moat provide downside protection, but the leveraged balance sheet limits flexibility. An upgrade to bullish would require evidence of margin stabilization and volume growth, while a downgrade to bearish would follow a dividend cut or accelerating revenue declines.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Clorox's 12-month outlook, with a consensus price target around $96.35 and implied upside of +11.5% versus the current price.
Average Target
$96.35
0 analysts
Implied Upside
+11.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$74 - $154
Analyst target range
Coverage is broad, with 17 analysts, but sentiment is decidedly cautious. The consensus recommendation is "hold" with a mean rating of 3.22 on a scale where higher is more bearish, and the average target price of $97.47 implies roughly 11.9% upside from the current $87.09 — a modest premium that reflects a stabilizing but not compelling outlook. The consensus leans neutral-to-bearish rather than bullish, consistent with the recent institutional actions: Jefferies downgraded from Buy to Hold on July 28, and the August 4 and September 11 updates from JP Morgan (Underweight), Evercore ISI (Underperform), Barclays (Underweight), UBS (Neutral), Citigroup (Neutral), and Wells Fargo (Equal Weight) show a clear pattern of maintained skepticism rather than fresh upgrades. The target range is extremely wide, from a low of $74.00 (about 15% downside) to a high of $154.00 (about 77% upside), a spread of more than 2x that signals unusually low conviction and high dispersion in assumptions. The high target likely assumes successful margin recovery, debt paydown, and a return to volume growth that re-rates the multiple toward historical norms; the low target prices in continued volume erosion, dividend pressure, and leverage constraints. With the average target only ~12% above spot and the consensus EPS estimate of $6.94 bracketed tightly between $6.81 and $7.04, the analyst community sees limited near-term catalysts — the setup is one of a fairly-valued defensive name awaiting operational proof, where the wide target spread itself is the most informative signal of uncertainty.
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Bulls vs Bears: CLX Investment Factors
The bear case currently has stronger evidence, given the persistent revenue decline, margin compression, and balance-sheet strain from the recent acquisition. The dividend yield above 5% is attractive but appears unsustainable with a payout ratio exceeding 100%, and the stock sits near its 52-week low with a -25.94% one-year decline. However, the bull case rests on the forward PE compression to 14.15x and the potential for margin recovery, which could drive a re-rating if management delivers. The single most important tension is whether Clorox can restore volume growth and margin stability before leverage and dividend obligations become a structural problem; resolution of this will determine whether the stock is a value trap or a turnaround opportunity.
Bullish
- Dividend yield near 5.2%: CLX offers a 5.18% dividend yield, far above the consumer staples sector norm, and has maintained its $1.24 quarterly payout as of February 2026. For income-focused investors, this yield provides a substantial cash return while awaiting a turnaround.
- Forward PE compression signals recovery: The stock trades at 19.8x trailing earnings but only 14.15x forward earnings, a 29% compression that implies the market expects EPS to rebound to the consensus $6.94. If that recovery materializes, the forward multiple is reasonable for a branded staples company.
- Low beta limits downside volatility: With a beta of 0.574, CLX is roughly 43% less volatile than the market, making it a defensive holding in a portfolio context. This low correlation to the S&P 500 can cushion drawdowns during market stress.
- Analyst target implies 11.9% upside: The average analyst target price of $97.47 represents an 11.9% upside from the current $87.09, even with a cautious 'hold' consensus. The high target of $154.00 suggests some analysts see substantial recovery potential.
Bearish
- Revenue contraction persists: Most recent quarterly revenue fell 2.01% year over year to $1.948 billion, and the consensus estimate of $8.30 billion implies continued low-single-digit pressure. Without top-line growth, the investment case relies entirely on margin recovery.
- Dividend payout exceeds earnings: The payout ratio of 102.6% means the dividend currently exceeds earnings, raising sustainability concerns. With free cash flow TTM of only $405 million against a market cap of $11.6 billion, the 5.18% yield may be at risk if earnings don't recover.
- Balance sheet strained by acquisition: Debt-to-equity stands at 61.3%, the current ratio is a thin 0.66, and the cash ratio is roughly 0.05, leaving little liquidity cushion. The Q4 cash flow statement shows $2.104 billion of acquisition spending and a $1.044 billion net cash decline, leaving only $143 million of cash.
- Margin compression evident: Gross margin fell to 41.27% in Q4 from 46.48% a year earlier and 43.23% sequentially, while net margin is just 8.37%. Operating margin of 24.73% was distorted by a large non-operating charge, highlighting earnings volatility.
CLX Technical Analysis
Clorox is in a sustained, multi-quarter downtrend that has only recently shown tentative stabilization. The stock is down 25.94% over the trailing year and 13.64% year to date, a stark divergence from the S&P 500's +15.53% one-year return, producing a relative strength of -41.47% versus the index. At $87.09, the shares sit at roughly 16.7% of the 52-week range of $79.12 to $128.90 — near the bottom of that band, which historically signals either deep-value accumulation or a falling knife, and the -36.76% max drawdown confirms the severity of the de-rating. The 180-day price series shows a clear sequence of lower highs: a peak near $108 in mid-August gave way to a slide to the low-$80s by late September, with the $79.12 low marking the critical floor. Short-term momentum has turned constructive even as the longer-term trend remains negative. The stock is up 2.63% over the past month versus a 1.22% gain for the S&P 500, yielding a positive relative strength of +1.41%, and the last two weeks show a steady grind higher from $80.41 on October 2 to $87.09 on October 16. However, the 3-month change of -9.58% and 6-month change of -16.72% show that this bounce is occurring within a broader decline — a classic mean-reversion rally off oversold conditions rather than a confirmed trend reversal. The divergence between a positive 1-month and deeply negative 1-year trend argues for caution until the stock reclaims intermediate resistance. Key levels are well defined: support sits at the 52-week low of $79.12, roughly 9% below the current price, while resistance lies at the 52-week high of $128.90, some 48% above. A decisive break below $79.12 would likely trigger momentum-driven selling and open a new leg lower, whereas a reclaim of the $95–$100 zone (the August breakdown area) would be the first evidence of a durable bottom. With a beta of just 0.574, Clorox is roughly 43% less volatile than the market, which limits drawdown risk in a portfolio context but also caps the upside velocity of any recovery; the short ratio of 3.19 days indicates moderate bearish positioning that could fuel a squeeze on any positive catalyst.
Beta
0.57
0.57x market volatility
Max Drawdown
-36.8%
Largest decline past year
52-Week Range
$79-$129
Price range past year
Annual Return
-25.7%
Cumulative gain past year
| Period | CLX Return | S&P 500 |
|---|---|---|
| 1m | +2.9% | -1.0% |
| 3m | -9.6% | +2.9% |
| 6m | -12.4% | +6.5% |
| 1y | -25.7% | +13.1% |
| ytd | -14.3% | +11.4% |
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CLX Fundamental Analysis
The revenue trajectory is contracting and uneven. Most recent quarterly revenue was $1.948 billion, down 2.01% year over year, and the quarterly sequence of $1.429 billion (Q1), $1.673 billion (Q2), $1.670 billion (Q3), and $1.948 billion (Q4) shows a seasonal pattern but no underlying growth — Q4 revenue of $1.948 billion also compares unfavorably with the prior-year Q4 of $1.988 billion. Segment data for the latest quarter shows Health and Wellness at $860 million, Household at $524 million, International at $281 million, and Lifestyle at $280 million, meaning the health/cleaning franchise remains the largest contributor while international and lifestyle remain sub-scale. The consensus revenue estimate of roughly $8.30 billion implies continued low-single-digit pressure, so the investment case cannot rest on top-line growth; it must rest on margin recovery and cash generation. Profitability is the brighter spot but is deteriorating at the margin. The company remains solidly profitable, with Q4 net income of $163 million (an 8.37% net margin) and a gross margin of 41.27%, down from 46.48% in the prior-year Q4 and 43.23% in the sequential Q3 — a clear compression trend. Operating margin for the quarter was 24.73% on a reported basis, though this figure is distorted by a large non-operating charge (total other income/expenses of -$809 million) that pushed pre-tax income down to $213 million against $1.022 billion of operating income. Trailing net margin of 8.74% and ROE of 6.52% are modest for a branded staples company, and the payout ratio of 102.6% means the dividend currently exceeds earnings — a sustainability question that will dominate the narrative. Balance-sheet health is the central risk. Debt-to-equity stands at 61.3%, the current ratio is a thin 0.66, and the cash ratio of roughly 0.05 leaves little liquidity cushion; the Q4 cash flow statement shows $2.104 billion of acquisition spending funded partly by $984 million of debt repayment activity and a $1.044 billion net cash decline, leaving only $143 million of cash at period end. Free cash flow TTM is $405 million against a market cap of roughly $11.6 billion, a modest FCF yield near 3.5%, and the Q3 quarter actually posted negative operating cash flow of -$122 million. ROA of 8.32% is respectable, but with interest coverage of about 18.6x and a cash-flow-to-debt ratio near 0.06, the company is dependent on internally generated cash and refinancing to service leverage — a manageable but no-longer-comfortable position for a defensive holding.
Quarterly Revenue
$1.9B
2026-06
Revenue YoY Growth
-2.0%
YoY Comparison
Gross Margin
41.3%
Latest Quarter
Free Cash Flow
$405000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CLX Overvalued?
Because Clorox is profitable (Q4 net income of $163 million; trailing EPS positive), the PE ratio is the appropriate primary metric. The stock trades at 19.8x trailing earnings but only 14.15x forward earnings, a roughly 29% compression that implies the market expects meaningful EPS recovery — consistent with the consensus forward EPS estimate of $6.94 versus the current trailing figure. The PEG ratio of -0.75 is not meaningful given negative growth, and the price-to-book ratio of 129x is distorted by a heavily levered, thin-equity capital structure, so it should be disregarded in favor of earnings- and cash-flow-based measures. On a peer basis, Clorox screens cheap relative to its own history but not obviously cheap versus staples peers. The PS ratio of 1.73x and EV/sales of 2.39x are low in absolute terms, but EV/EBITDA of 14.55x is roughly in line with mature household-products peers, and the 5.18% dividend yield is well above the sector norm — a yield that reflects distress rather than generosity given the 102.6% payout ratio. The forward PE of 14.15x versus the trailing 19.8x suggests the discount is already pricing in an earnings rebound; if that rebound disappoints, the stock is not statistically cheap on normalized earnings. Historical ratios show the stock's own PE band has ranged widely — from roughly 11.1x at the fiscal 2025 year-end to 47.4x in the September 2025 quarter and 26.0x in late 2024 — so the current 19.8x sits in the middle-to-lower portion of its multi-year range. The PS ratio of 1.73x, however, is near the low end of a historical band that frequently printed between 7x and 12x, reflecting both the price collapse and the acquisition-driven revenue base. Net-net, the market is pricing Clorox as a low-growth, levered, dividend-at-risk story; re-rating requires proof of margin stabilization and FCF recovery rather than multiple expansion alone.
PE
19.8x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 11x~78x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.6x
Enterprise Value Multiple
Investment Risk Disclosure
Clorox faces significant financial and operational risks. The company's debt-to-equity ratio of 61.3% and current ratio of 0.66 indicate limited liquidity, exacerbated by the recent multi-billion-dollar acquisition that consumed $2.104 billion in cash and left only $143 million on the balance sheet. Free cash flow TTM of $405 million is modest against $11.6 billion market cap, and the payout ratio of 102.6% means the dividend exceeds earnings, raising the risk of a dividend cut if cash flow doesn't improve. Additionally, revenue concentration in the U.S. (85% of sales) exposes the company to domestic economic slowdowns and competitive pressures. Margin compression is another concern: gross margin fell to 41.27% in Q4 from 46.48% a year earlier, and net margin is only 8.37%, leaving little room for error. The company's ability to service its debt depends on internally generated cash, with a cash-flow-to-debt ratio near 0.06, which is manageable but no longer comfortable.
Market and competitive risks are also elevated. The stock trades at a forward PE of 14.15x, which is not statistically cheap on normalized earnings if the expected EPS rebound disappoints. The PS ratio of 1.73x is low in absolute terms but reflects the acquisition-driven revenue base, and EV/EBITDA of 14.55x is in line with mature peers, offering little valuation cushion. Competitive disruption from private-label brands and changing consumer preferences toward natural products could erode Clorox's market share, particularly in cleaning and household care. Regulatory headwinds, such as potential restrictions on certain chemicals, could increase compliance costs. With a beta of 0.574, the stock is less sensitive to market swings, but sector rotation away from defensive staples in a rising-rate environment could pressure the multiple. Recent news highlights the stock at an 11-year low, with headlines framing it as a high-risk contrarian play, indicating negative sentiment that could persist.
In a worst-case scenario, a continued revenue decline coupled with margin erosion and a dividend cut could trigger a sharp sell-off. The 52-week low of $79.12 represents a 9.1% downside from the current $87.09, and the analyst low target of $74.00 implies a 15% decline. If the company fails to deleverage and cash flow remains weak, the stock could test the $74 level, a 15% loss from current prices. A more severe scenario, such as a recession hitting consumer spending and exacerbating volume declines, could push the stock below the 52-week low toward the $70s, representing a 20%+ drawdown. The max drawdown over the past year was -36.76%, illustrating the potential magnitude of losses in an adverse scenario.
FAQ
The most severe risk is dividend sustainability, given the 102.6% payout ratio and modest free cash flow of $405 million TTM. A dividend cut would likely trigger a sharp sell-off. Financial risk is elevated due to the 61.3% debt-to-equity ratio and thin 0.66 current ratio, limiting flexibility. Competitive and macro risks include private-label competition and consumer downtrading, which could accelerate revenue declines. Finally, company-specific execution risk surrounds the recent acquisition integration and margin recovery; failure to deliver could lead to further multiple compression.
Our 12-month forecast has three scenarios: bull case (25% probability) targeting $110-128, base case (55%) targeting $90-105, and bear case (20%) targeting $74-80. The base case is most likely, assuming modest margin improvement and stable revenue, with the stock trading near the analyst average target of $97.47. The key assumption is that gross margin stabilizes around 42-43% and free cash flow improves to $500-600 million. The wide analyst target range of $74 to $154 reflects high uncertainty, and the stock's low beta suggests limited volatility.
CLX appears fairly valued on a forward basis. The forward PE of 14.15x is reasonable for a mature consumer staples company, but the trailing PE of 19.8x is above the low end of its historical range. The PS ratio of 1.73x is low in absolute terms, but EV/EBITDA of 14.55x is in line with peers. The market is pricing in an earnings recovery to $6.94 per share, as evidenced by the 29% compression from trailing to forward PE. If that recovery disappoints, the stock could be overvalued; if it materializes, the valuation is fair. Relative to its own history, the current PE is in the middle-to-lower portion of its multi-year range.
CLX is not a compelling buy for most investors at current levels. The stock trades at $87.09, with only 11.9% upside to the average analyst target of $97.47, and the consensus rating is 'hold'. The dividend yield of 5.18% is attractive, but the payout ratio of 102.6% raises sustainability concerns, and revenue is declining at -2.01% year over year. The biggest downside risk is a dividend cut, which could push the stock toward the $74 analyst low target, a 15% decline. For income-focused investors with a long horizon, the yield may be worth the risk, but growth investors should look elsewhere.
CLX is better suited for long-term, income-oriented investors rather than short-term traders. The stock's beta of 0.574 indicates low volatility, and the 5.18% dividend yield provides steady income, but the turnaround may take multiple quarters to materialize. Short-term trading is less attractive given the lack of near-term catalysts and the potential for further downside if the dividend is cut. A minimum holding period of 2-3 years is recommended to allow for margin recovery and deleveraging, aligning with the company's defensive characteristics and dividend aristocrat history.