Clorox
CLX
$87.11
-9.67%
The Clorox Company is a leading manufacturer and marketer of consumer products in the Household & Personal Products industry, operating through a diverse portfolio of well-known brands including its namesake bleach, Pine-Sol, Glad, Hidden Valley, and Burt's Bees. The company is a dominant player in the consumer defensive sector, known as a 'dividend aristocrat' with a long history of shareholder returns, and it maintains a strong competitive identity as a trusted, staple-brand operator with over 80% of its sales in the U.S. The current investor narrative is dominated by the company's ongoing recovery from a significant cyberattack and subsequent operational disruptions, which have pressured sales and margins, creating a debate around the pace and sustainability of its return to normalized growth and profitability.…
CLX
Clorox
$87.11
Related headlines
Investment Opinion: Should I buy CLX Today?
Rating: Hold. The core thesis is that while Clorox's valuation reflects significant pessimism and a margin recovery is underway, the combination of high financial leverage, stagnant revenue, and weak technicals warrants caution until clearer signs of a sustainable turnaround emerge. This aligns with the neutral-to-cautious stance of the limited analyst coverage.
Supporting evidence includes a forward PE of 13.78x, which is reasonable for a recovery story, and robust TTM free cash flow of $778 million supporting the 4.06% dividend yield. However, revenue declined -0.77% YoY in the last quarter, gross margin of 43.16% remains below historical peaks, and the debt-to-equity ratio of 8.97 is a major overhang. The stock's price is just 1.6% above its 52-week low, indicating the market has priced in substantial risk.
The two biggest risks are: 1) A stalling margin recovery, and 2) Inability to reduce leverage due to sustained operational weakness. This Hold rating would upgrade to Buy if the company demonstrates two consecutive quarters of sequential revenue growth and gross margins stabilize above 44%, signaling the turnaround is gaining traction. It would downgrade to Sell if revenue growth turns more negative (below -3% YoY) or if free cash flow meaningfully declines, threatening the dividend. The stock is fairly valued relative to its challenged near-term prospects but appears undervalued only if one has high conviction in a full and swift operational recovery.
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CLX 12-Month Price Forecast
The investment case for CLX is a balanced bet on a slow, grinding recovery against a backdrop of high financial risk. The positive free cash flow and defensive brand portfolio provide a floor, but the path to regaining investor confidence is long and uncertain. The base case of a gradual recovery is most probable, but the asymmetric risk is to the downside if execution falters. The stance would upgrade to bullish on clear evidence of sustainable margin recovery and debt reduction, or downgrade to bearish on a dividend cut or a material deterioration in top-line trends.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Clorox's 12-month outlook, with a consensus price target around $113.24 and implied upside of +30.0% versus the current price.
Average Target
$113.24
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$70 - $113
Analyst target range
Analyst coverage for Clorox is limited, with only 3 analysts providing estimates, indicating this large-cap stock may have reduced institutional interest following its operational challenges. The consensus sentiment, inferred from recent institutional ratings, is neutral to cautious, with firms like Deutsche Bank, Morgan Stanley, and UBS maintaining 'Hold' or 'Neutral' equivalents, while Evercore ISI has an 'Underperform' rating; there is no explicit average price target provided in the data to calculate implied upside or downside from the current price of $87.11. The target price range is also not available in the provided dataset; however, the wide dispersion in recent analyst actions (from Underperform to Hold) and the limited number of covering analysts signal high uncertainty and a lack of strong conviction regarding the company's near-term trajectory. This environment of sparse coverage and mixed sentiment can lead to higher volatility and less efficient price discovery as the market awaits clearer signs of a fundamental turnaround.
Bulls vs Bears: CLX Investment Factors
The bear case currently holds stronger evidence, as reflected in the stock's severe price decline, stagnant revenue, high debt, and negative technical momentum. The bull case rests on the expectation of a normalized earnings recovery, supported by strong brand equity and free cash flow. The single most important tension in the investment debate is the pace and sustainability of the margin recovery. If Clorox can consistently restore gross margins to the mid-40% range and demonstrate sequential revenue growth, the depressed valuation could offer significant upside. However, if margins remain pressured and revenue fails to re-accelerate, the high financial leverage and weak sentiment could lead to further downside.
Bullish
- Strong Free Cash Flow Supports Dividend: The company generates robust TTM free cash flow of $778 million, which comfortably funds its $1.24 quarterly dividend. This cash generation underpins its 'dividend aristocrat' status and provides a tangible return to shareholders despite operational headwinds.
- Profitability Recovering from Cyberattack Lows: Net income in Q2 FY2026 rebounded to $157 million (9.38% margin) from $80 million in Q1, showing sequential improvement. Gross margin also recovered to 43.16% from 41.57% the prior quarter, indicating progress in restoring operational efficiency post-disruption.
- Valuation Normalizing with Forward PE of 13.8x: The forward PE of 13.78x is significantly lower than the trailing PE of 18.31x, reflecting market expectations for an earnings recovery. This forward multiple suggests the stock is not expensive if the company can meet its projected profit rebound.
- High Short Interest Could Fuel a Squeeze: With a short interest ratio of 3.74, bearish positioning is elevated. Any positive catalyst, such as a faster-than-expected margin recovery or a revenue beat, could trigger a sharp short-covering rally from the current depressed price near its 52-week low.
Bearish
- Severe Technical Downtrend and Underperformance: The stock is down 37.12% over the past year and trades just 1.6% above its 52-week low of $86.01. It has dramatically underperformed the S&P 500 by 66 percentage points over the same period, signaling deep-seated negative sentiment and company-specific issues.
- Elevated Debt Load Increases Financial Risk: The debt-to-equity ratio of 8.97 is extremely high, indicating significant financial leverage. This constrains strategic flexibility and amplifies risk if interest rates remain elevated or if free cash flow generation falters during the recovery.
- Revenue Growth Remains Stagnant: Q2 FY2026 revenue of $1.673 billion declined 0.77% year-over-year and fell sequentially from $1.988 billion in Q4 FY2025. This indicates the top-line recovery from the cyberattack is not yet materializing, raising questions about market share retention.
- Margin Recovery Incomplete and Volatile: While improving, the Q2 gross margin of 43.16% and net margin of 9.38% remain below the Q4 FY2025 levels of 46.33% and 16.70%, respectively. This volatility highlights the ongoing operational challenges in fully restoring pre-disruption profitability.
CLX Technical Analysis
The stock is in a pronounced and sustained downtrend, evidenced by a 1-year price change of -37.12% and a 6-month decline of -22.54%. As of the latest close of $87.11, the stock is trading at just 1.6% above its 52-week low of $86.01, positioning it near the absolute bottom of its annual range; this suggests the market is pricing in severe pessimism, presenting a potential deep-value opportunity but also signaling significant fundamental concerns that must be resolved for a durable recovery. Recent momentum remains decisively negative, with the stock down 16.43% over the past month and 22.77% over the past three months, sharply underperforming the S&P 500, which gained 9.98% and 4.14% over the same periods, respectively; this severe negative relative strength indicates the sell-off is accelerating and company-specific issues are overwhelming any broader market tailwinds. Key technical support is firmly established at the 52-week low of $86.01, while resistance sits far above at the 52-week high of $140.25; a decisive break below the $86 support could trigger another leg down, whereas a hold and reversal from this level would be the first step in forming a base. The stock's elevated short interest ratio of 3.74 suggests significant bearish positioning, which could fuel a sharp rally on any positive catalyst, but also reflects deep-seated skepticism about the near-term outlook.
Beta
—
—
Max Drawdown
-41.4%
Largest decline past year
52-Week Range
$86-$139
Price range past year
Annual Return
-37.1%
Cumulative gain past year
| Period | CLX Return | S&P 500 |
|---|---|---|
| 1m | -16.4% | +9.9% |
| 3m | -22.8% | +3.6% |
| 6m | -22.5% | +6.7% |
| 1y | -37.1% | +27.1% |
| ytd | -13.6% | +5.7% |
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CLX Fundamental Analysis
Revenue growth remains challenged, with the most recent quarterly (Q2 FY2026) revenue of $1.673 billion representing a slight year-over-year decline of -0.77%. Segment data from the latest period shows Health and Wellness ($643M) and Household ($419M) as the largest contributors, but the multi-quarter trend indicates top-line pressure as the company recovers from prior disruptions, with revenue down sequentially from $1.988 billion in the prior quarter (Q4 FY2025). Profitability has shown signs of recovery but remains volatile; net income for Q2 FY2026 was $157 million, translating to a net margin of 9.38%, a significant improvement from the $80 million net income in Q1 FY2026, while gross margin for the quarter was 43.16%. However, margins are still below the levels seen in the stronger Q4 FY2025 period, where gross margin reached 46.33% and net margin was 16.70%, indicating the path to full margin restoration is ongoing. The balance sheet shows elevated financial leverage with a debt-to-equity ratio of 8.97, a concerning level that increases financial risk, though the company continues to generate substantial free cash flow, with TTM free cash flow of $778 million. The current ratio of 0.84 indicates potential liquidity strain, but the robust free cash flow generation, which supports the dividend and debt service, provides a crucial offset to the high leverage.
Quarterly Revenue
$1.7B
2025-12
Revenue YoY Growth
+0.00%
YoY Comparison
Gross Margin
+0.43%
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?
Given the company's positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing twelve-month PE ratio is 18.31x, while the forward PE is notably lower at 13.78x; this significant gap implies the market expects a substantial recovery in earnings over the next year, pricing in the anticipated rebound from recent operational headwinds. Compared to sector averages, Clorox's trailing PE of 18.31x is not directly available in the provided data for a peer comparison, but its Price-to-Sales (PS) ratio of 2.09x offers a cross-check; this PS multiple suggests a moderate sales valuation for a stable, branded consumer goods company, though the premium or discount to the industry cannot be quantified without a specific industry average PS. Historically, the stock's own valuation has been highly volatile due to earnings swings; the current trailing PE of 18.31x is below the extreme highs seen in recent quarters (e.g., 672.8x in Q3 FY2025) which were artifacts of depressed earnings, suggesting the valuation is now normalizing as profitability recovers, but it remains elevated relative to its own longer-term history when earnings were more stable, indicating the market is still pricing in a full recovery.
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
12.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are pronounced. The company's debt-to-equity ratio of 8.97 is alarmingly high, creating significant interest expense burden and limiting financial flexibility. While TTM free cash flow of $778 million provides a cushion, the current ratio of 0.84 indicates potential liquidity strain. Profitability remains volatile, with net margin swinging from 16.70% in Q4 FY2025 to 9.38% in the latest quarter, demonstrating that the operational recovery from the cyberattack is not yet complete or stable. Revenue concentration, with over 80% of sales in the U.S., also presents a geographic risk if domestic consumer spending weakens.
Market & Competitive Risks center on valuation compression and sentiment. The stock has suffered a max drawdown of -41.42% and trades near its 52-week low, but its forward PE of 13.8x still prices in a full earnings recovery. If execution stumbles, this multiple could contract further. The stock's severe underperformance versus the S&P 500 (relative strength of -66.2 over one year) indicates it is being treated as a company-specific story, vulnerable to further negative news. In the competitive household products landscape, private label competition could pressure pricing power as the company tries to rebuild margins.
Worst-Case Scenario involves a failure to stabilize operations, leading to a downward spiral. This would entail another quarter of declining revenue and contracting margins, triggering credit rating concerns due to the high debt load. Analyst sentiment, already cautious, could turn overtly negative, leading to target price cuts. In this adverse scenario, the stock could breach its 52-week low support of $86.01 and re-test levels not seen in several years. A realistic downside from the current price of $87.11 could be -20% to -30%, reflecting a move toward the $60-$70 range if the recovery narrative completely unravels and the dividend sustainability comes into question.
FAQ
The key risks are, in order of severity: 1) Financial Risk: An extremely high debt-to-equity ratio of 8.97 increases vulnerability to rising rates and operational setbacks. 2) Operational Risk: The incomplete recovery from the cyberattack, evidenced by volatile margins and flat revenue, may persist longer than expected. 3) Competitive/Market Risk: The stock's severe underperformance (-37% over 1 year) reflects negative sentiment that could lead to further selling on any bad news. 4) Dividend Risk: While currently supported by strong free cash flow, a prolonged downturn could pressure the company's ability to maintain its 'aristocrat' status.
The 12-month forecast presents three scenarios. The Base Case (55% probability) sees a gradual recovery with a target range of $95-$110, assuming slow margin improvement and stable revenue. The Bull Case (25% probability) envisions a faster turnaround to a range of $115-$130. The Bear Case (20% probability) warns of further decline to $70-$86 if the recovery stalls. The Base Case is most likely, hinging on the assumption that Clorox can continue its sequential quarterly profit improvement without a revenue setback.
CLX appears fairly valued relative to its near-term challenged prospects. The forward PE of 13.78x is not demanding and implies the market expects earnings to recover from recent depressed levels. However, the Price-to-Sales ratio of 2.09x and elevated debt load temper the view that it is deeply undervalued. The valuation implies the market is paying a fair price for a company in the midst of an uncertain recovery; it is not a clear discount unless one has high conviction that pre-cyberattack profitability levels will be swiftly regained.
CLX is a speculative buy only for investors with a high risk tolerance and a long-term horizon who believe in a full operational recovery. The current price near its 52-week low offers potential upside if margins recover, supported by a 4.06% dividend yield. However, it carries significant risks, including high debt (D/E of 8.97) and stagnant revenue growth (-0.77% YoY). For most investors, it is prudent to wait for more concrete evidence of a sustainable turnaround, making it a 'Hold' rather than a clear 'Buy' at this juncture.
CLX is unsuitable for short-term trading due to its high volatility, negative momentum, and company-specific uncertainty. It is a candidate only for long-term investment (minimum 3-5 years) for investors betting on a full operational and financial recovery of this staple-brand company. The 4% dividend yield provides some income while waiting, but the high debt load and turnaround narrative require patience. Given the deep technical and fundamental challenges, a long horizon is necessary to see if management can successfully navigate the recovery path.