Clorox
CLX
$96.56
+3.75%
Clorox is a leading consumer goods company that manufactures and markets a diverse portfolio of household and personal care products, including cleaning supplies, laundry care, trash bags, cat litter, charcoal, food dressings, water filtration, and natural personal care items. With iconic brands such as Clorox, Pine-Sol, Glad, Hidden Valley, and Burt's Bees, the company holds strong market positions in its core categories, particularly in cleaning and disinfecting. The current investor narrative centers on Clorox's turnaround efforts amid a prolonged stock decline, with attention on its ability to stabilize revenue, expand margins, and restore growth after a period of volume pressure and cost inflation. Recent news highlights a contrarian view that the stock's high dividend yield and multi-year low may present a value opportunity, but the market remains skeptical about the pace of recovery.…
CLX
Clorox
$96.56
Related headlines
Investment Opinion: Should I buy CLX Today?
Rating: Hold. The thesis is that Clorox offers a high dividend yield and low valuation, but the lack of revenue growth and high leverage warrant caution. The analyst consensus is neutral, with an implied average target of ~$115 based on forward PE of 15.77x and estimated EPS of $7.30, suggesting 19.2% upside.
Supporting evidence: The trailing PE of 18.30x is below the consumer staples average of ~20-25x, and the PEG ratio of 0.096 indicates deep undervaluation if growth returns. Revenue is declining at -0.77% YoY, but gross margin improved to 43.16% in Q2 FY2026. Free cash flow of $778 million supports the dividend, and the forward PE of 15.77x implies earnings growth expectations. However, the debt-to-equity of 8.97x and current ratio of 0.84 are concerning.
Risks & Conditions: The biggest risks are continued revenue decline and dividend cut. This Hold would upgrade to Buy if revenue growth turns positive and debt-to-equity falls below 5x, or downgrade to Sell if the dividend is reduced or revenue decline accelerates below -2%. Valuation verdict: The stock appears undervalued relative to its history and peers, but the discount is warranted given the operational challenges.
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CLX 12-Month Price Forecast
Clorox is a high-yield, deep-value stock with significant operational challenges. The valuation is cheap, but the lack of revenue growth and high leverage limit upside. The base case of a range-bound stock with a 4% dividend yield is most likely. An upgrade to bullish would require visible revenue stabilization and debt reduction, while a downgrade to bearish would follow a dividend cut. The neutral stance reflects balanced risk/reward with a slight bearish tilt given the persistent revenue decline.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Clorox's 12-month outlook, with a consensus price target around $125.53 and implied upside of +30.0% versus the current price.
Average Target
$125.53
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$77 - $126
Analyst target range
Clorox is covered by 5 analysts, with a consensus leaning neutral to bearish. The average estimated EPS is $7.30, with a low of $6.88 and high of $7.51, while average revenue estimate is $8.22 billion. The consensus recommendation is not explicitly provided, but institutional ratings from major firms (Deutsche Bank, Morgan Stanley, Evercore, UBS, JP Morgan, Citigroup, Wells Fargo, TD Cowen) show a mix of Hold, Equal Weight, Neutral, and Underperform, with no Buy ratings. This indicates a cautious stance, with most analysts expecting the stock to perform in line with or below the market. The average target price is not directly given, but based on the forward PE of 15.77x and estimated EPS of $7.30, the implied target is approximately $115.12, suggesting about 19.2% upside from the current price of $96.56. However, the low target (based on low EPS of $6.88 and a potential lower multiple) could be around $103, while the high target (high EPS of $7.51 and a higher multiple) could be $120. The wide range reflects high uncertainty about the turnaround. Recent ratings have been mostly neutral, with no upgrades or downgrades in the past six months, indicating that analysts are waiting for concrete evidence of improvement. The lack of bullish conviction suggests that the stock may remain range-bound until fundamentals show a clear inflection.
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Bulls vs Bears: CLX Investment Factors
Clorox presents a classic value trap versus turnaround debate. On the bull side, the stock offers a compelling 4.06% dividend yield, a trailing PE of 18.30x near historical lows, improving gross margins, and strong free cash flow. On the bear side, revenue continues to decline, debt-to-equity is dangerously high at 8.97x, the stock has severely underperformed the market, and analysts are uniformly cautious. The single most important tension is whether the company can stabilize and eventually grow revenue. If the top line inflects positively, the low valuation and high yield could drive a significant re-rating. If revenue continues to slide, the high leverage and dividend sustainability concerns could lead to further downside. Currently, the bear case has stronger evidence given the persistent revenue decline and analyst skepticism, but the valuation discount offers a potential margin of safety for patient investors.
Bullish
- High dividend yield at multi-year low: Clorox offers a 4.06% dividend yield, supported by a 74.3% payout ratio and $778 million in trailing free cash flow. The stock recently hit an 11-year low, providing a potential entry point for income-focused investors.
- Valuation discount to historical averages: The trailing PE of 18.30x is near the low end of its 5-year range (20-40x), and the PEG ratio of 0.096 suggests the market expects minimal growth. This implies a margin of safety if the turnaround materializes.
- Improving gross margin trajectory: Gross margin improved from 41.57% in Q1 FY2026 to 43.16% in Q2 FY2026, indicating easing input cost pressures and better pricing. The trailing twelve-month gross margin is 45.23%, above the sector average.
- Strong free cash flow generation: Trailing free cash flow of $778 million provides a cushion for debt service and dividends. The FCF yield is approximately 5.2% at the current market cap, offering a solid cash return to shareholders.
Bearish
- Persistent revenue decline: Q2 FY2026 revenue fell 0.77% YoY to $1.673 billion, following a pattern of mixed results. The top line remains under pressure from volume declines and category competition, with no clear catalyst for growth.
- Extremely high debt-to-equity ratio: Debt-to-equity stands at 8.97x, indicating significant leverage. While interest coverage is adequate (EBIT/interest ~8.6x), the high debt load increases financial risk if earnings deteriorate further.
- Weak relative price performance: The stock has declined 24.47% over the past year versus the S&P 500's gain of 20.63%, with a 1-year relative strength of -45.10%. This persistent underperformance reflects deep market skepticism.
- Analyst consensus is neutral to bearish: Among 5 analysts, ratings are predominantly Hold/Equal Weight/Neutral, with no Buy ratings. The lack of bullish conviction suggests limited near-term upside catalysts.
CLX Technical Analysis
Clorox is in a sustained downtrend, with the stock price declining 24.47% over the past year, significantly underperforming the S&P 500's gain of 20.63%. The current price of $96.56 sits at 73.1% of its 52-week range (low $84.70, high $132.03), indicating it is closer to the lower end of the range. This positioning suggests the stock is in a bearish phase, with potential value opportunity if a bottom forms, but also risk of further downside if fundamentals deteriorate. The 1-year relative strength of -45.10% versus the S&P 500 underscores persistent weakness. Short-term momentum shows conflicting signals: the 1-month price change is -2.78%, while the 3-month change is -8.28%, indicating continued near-term selling pressure. However, the 1-month relative strength of -6.85% suggests the stock is underperforming the market in the short term as well, with no clear sign of reversal. The stock's beta of 0.53 implies it is less volatile than the market, but the persistent downtrend reflects company-specific headwinds rather than broad market moves. Key support is at the 52-week low of $84.70, a break below which could signal further downside toward $80. Resistance is at the 52-week high of $132.03; a breakout above that level would indicate a trend reversal, though it appears unlikely in the near term given current momentum. The stock's low beta suggests that any recovery may be gradual and less correlated with market rallies.
Beta
0.53
0.53x market volatility
Max Drawdown
-34.5%
Largest decline past year
52-Week Range
$85-$132
Price range past year
Annual Return
-24.5%
Cumulative gain past year
| Period | CLX Return | S&P 500 |
|---|---|---|
| 1m | -2.8% | +1.8% |
| 3m | -8.3% | +10.0% |
| 6m | -9.1% | +8.8% |
| 1y | -24.5% | +21.1% |
| ytd | -4.3% | +10.7% |
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CLX Fundamental Analysis
Revenue has been under pressure, with the most recent quarter (Q2 FY2026, ending December 2025) reporting $1.673 billion, a decline of 0.77% year-over-year. This follows a pattern of mixed results: Q1 FY2026 revenue was $1.429 billion, Q4 FY2025 was $1.988 billion, and Q3 FY2025 was $1.668 billion. The year-over-year decline in the latest quarter indicates ongoing volume challenges, though the sequential improvement from Q1 suggests some stabilization. Segment data shows Health and Wellness contributed $643 million, Household $419 million, Lifestyle $321 million, and International $294 million, with Health and Wellness being the largest driver. The revenue trajectory remains tepid, and the investment case hinges on a return to organic growth. Profitability has improved, with net income of $157 million in Q2 FY2026 versus $80 million in Q1 FY2026, and gross margin of 43.16% compared to 41.57% in the prior quarter. The trailing twelve-month net margin is 11.40%, and operating margin is 16.57%, indicating healthy profitability relative to the consumer staples sector. However, the net income of $157 million is down from $193 million in the same quarter last year, reflecting margin compression from cost inflation and mix shifts. The balance sheet shows elevated leverage, with a debt-to-equity ratio of 8.97 and a current ratio of 0.84, indicating that current liabilities exceed current assets. Free cash flow for the trailing twelve months is $778 million, providing some cushion, but the high debt load (debt-to-equity near 9x) raises financial risk. Return on equity is 2.52%, which is low, partly due to the high leverage. The company generates sufficient cash to cover dividends (payout ratio of 74.3%), but the reliance on debt financing is a concern if earnings deteriorate further.
Quarterly Revenue
$1.7B
2025-12
Revenue YoY Growth
-0.77%
YoY Comparison
Gross Margin
43.16%
Latest Quarter
Free Cash Flow
$778000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CLX Overvalued?
Since net income is positive, the primary valuation metric is the price-to-earnings (PE) ratio. The trailing PE is 18.30x, while the forward PE is 15.77x, implying that the market expects earnings growth over the next year. The gap between trailing and forward PE suggests an anticipated improvement in earnings, which aligns with the turnaround narrative. Compared to the industry average (not provided, but consumer staples typically trade at 20-25x), Clorox's trailing PE of 18.30x appears at a discount, possibly reflecting the market's skepticism about growth prospects. The price-to-sales ratio of 2.09x is below the historical average, indicating a potential value opportunity if revenue stabilizes. Historically, Clorox's trailing PE has ranged from around 20x to over 40x in the past five years. The current 18.30x is near the lower end of that range, suggesting that the stock is priced for pessimism. The PEG ratio of 0.096 is extremely low, implying that the market expects very low or negative earnings growth, which is consistent with the recent earnings decline. The low PEG could also indicate undervaluation if the company can return to growth. Overall, the valuation reflects a deeply discounted view of the company's near-term prospects, with the forward PE suggesting some recovery is priced in.
PE
18.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range -98x~185x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Clorox's balance sheet is highly leveraged with a debt-to-equity ratio of 8.97x, meaning debt is nearly nine times equity. While trailing free cash flow of $778 million covers interest expenses (EBIT/interest ~8.6x), any sustained earnings decline could strain debt service. The current ratio of 0.84 indicates current liabilities exceed current assets, raising liquidity concerns. Revenue declined 0.77% YoY in the latest quarter, and the net income of $157 million was down from $193 million in the same quarter last year, showing margin compression. The high payout ratio of 74.3% leaves limited room for dividend growth or reinvestment if earnings falter.
Market & Competitive Risks: The stock's beta of 0.53 suggests low market correlation, but the persistent downtrend reflects company-specific headwinds. Valuation compression risk is elevated: the trailing PE of 18.30x, while below historical averages, could contract further if earnings disappoint. Competitive pressures from private labels and other household brands may continue to pressure volumes. Regulatory risks include potential changes in chemical ingredient regulations or environmental compliance costs. The recent news highlights a contrarian view, but the market remains skeptical, as evidenced by the stock's 24.47% annual decline.
Worst-Case Scenario: If revenue continues to decline, margins compress further, and the dividend is cut, the stock could fall to its 52-week low of $84.70, representing a 12.3% downside from the current price of $96.56. In a severe recession or company-specific crisis (e.g., a major product recall or debt covenant breach), the stock could test $80, a 17.1% decline. The historical max drawdown of -34.47% suggests that in a worst-case scenario, the stock could fall to approximately $63, a 34.7% loss from current levels.
FAQ
The primary risk is financial: debt-to-equity of 8.97x and a current ratio of 0.84 indicate high leverage and potential liquidity stress. Second, revenue is declining (-0.77% YoY), and if this continues, it could pressure margins and the dividend. Third, competitive risks from private labels and other brands could erode market share. Finally, macro risks include a recession that could reduce consumer spending on premium products. The most severe risk is a dividend cut, which would likely cause the stock to fall to its 52-week low of $84.70 or lower.
The 12-month outlook is mixed. The base case (50% probability) sees the stock trading in a $95-$110 range, with flat revenue and a stable dividend. The bull case (20% probability) targets $110-$125 if revenue growth returns and margins expand. The bear case (30% probability) sees the stock falling to $80-$95 if revenue declines accelerate or the dividend is cut. The most likely scenario is the base case, with the stock offering a 4% yield and limited capital appreciation until the turnaround gains traction.
Based on trailing PE of 18.30x, Clorox appears undervalued relative to its historical average of 20-40x and the consumer staples sector average of 20-25x. The PEG ratio of 0.096 suggests the market expects very low earnings growth, which is consistent with recent declines. The price-to-sales ratio of 2.09x is also below historical norms. However, the low valuation is justified by the company's revenue decline and high leverage. The forward PE of 15.77x implies that earnings are expected to recover, but if they don't, the stock could remain cheap for a reason.
Clorox offers a compelling 4.06% dividend yield and trades at a trailing PE of 18.30x, near the low end of its historical range. The implied analyst target of ~$115 suggests 19.2% upside from the current price of $96.56. However, revenue declined 0.77% YoY in the latest quarter, and the debt-to-equity ratio of 8.97x is a major concern. For income investors with a long-term horizon and tolerance for volatility, CLX could be a good buy at current levels, provided the dividend remains sustainable. Growth-oriented investors may want to wait for evidence of a revenue turnaround before committing.
Clorox is better suited for long-term investment, given its high dividend yield and low beta of 0.53, which reduces volatility. The stock is in a sustained downtrend, so short-term trading is risky without a clear catalyst. The turnaround story requires patience, and a minimum holding period of 2-3 years is recommended to allow the company to stabilize revenue and reduce debt. Income investors may find the 4.06% yield attractive, but capital appreciation will depend on successful execution of the turnaround plan.
