Core Viewpoint - Clorox's dividend yield appears attractive at just under 5%, but the stock has declined 37% over the past year, raising concerns about the sustainability of the dividend [1][9]. Dividend Metrics - The annual dividend is $4.92 per share, resulting in a dividend yield of 4.99% [2]. - Clorox has increased its dividend for over 13 consecutive years, with the most recent increase being 1.6% in April 2025 [2]. - The 5-year compound annual growth rate (CAGR) for dividends is 2.5% [2]. Cash Flow Analysis - In fiscal 2025, Clorox paid $602 million in dividends against a free cash flow of $761 million, resulting in a free cash flow payout ratio of 79% [3][4]. - The payout ratio was concerning in fiscal 2024, where dividends exceeded free cash flow at 123% [3][4]. - Operating cash flow has shown volatility, with figures swinging from $1.5 billion in fiscal 2020 to $695 million in fiscal 2024, then recovering to $981 million in fiscal 2025 [4]. Debt and Equity Position - Clorox has a total debt of $2.88 billion and cash reserves of $167 million, leading to a net debt of $2.71 billion [5]. - The net debt-to-EBITDA ratio is 2.4x, which is considered manageable for a consumer staples company [5]. - Shareholder equity has decreased significantly from $908 million in fiscal 2020 to $321 million in fiscal 2025, indicating a trend of paying out more in dividends and buybacks than the company has earned [6]. Management Outlook - CEO Linda Rendle acknowledged near-term challenges but highlighted operational strength, noting a tenth consecutive quarter of gross margin expansion [7]. - CFO Luc Bellet mentioned expected tariff headwinds of about $100 million annually but views this as manageable through sourcing changes and targeted pricing [7]. - Management expressed confidence in the balance sheet and cash flow, suggesting the dividend is secure, although dividend growth has slowed to 1.6% in 2025 compared to historical rates of 5% to 7% [8]. Dividend Safety Assessment - Clorox has a moderate risk rating for dividend safety, with a fiscal 2025 payout ratio of 79% deemed technically sustainable [9]. - However, the previous year's payout ratio of 123% and recent cash flow volatility raise concerns about the dividend's sustainability [9][10].

Core Viewpoint - Clorox's stock has declined 37% over the past year, raising concerns about the sustainability of its attractive dividend yield of 4.99% [2] Financial Metrics - Clorox pays an annual dividend of $4.92 per share, with a dividend yield of 4.99% and has increased dividends for over 13 consecutive years, with a recent increase of 1.6% in April 2025 [2] - The company reported free cash flow of $761 million in fiscal 2025, an improvement from $483 million in fiscal 2024, while dividends paid remained stable at $602 million [4] - The free cash flow payout ratio improved from 123% in fiscal 2024 to 79% in fiscal 2025, indicating a more manageable dividend payout [3][4] Cash Flow and Debt Analysis - Operating cash flow has been volatile, decreasing from $1.5 billion in fiscal 2020 to $695 million in fiscal 2024, then recovering to $981 million in fiscal 2025 [4] - Clorox has total debt of $2.88 billion against $167 million in cash, resulting in net debt of $2.71 billion, with a net debt-to-EBITDA ratio of 2.4x, which is considered manageable for a consumer staples company [5][6] Shareholder Equity and Management Outlook - Shareholder equity has declined significantly from $908 million in fiscal 2020 to $321 million in fiscal 2025, reflecting a history of paying out more in dividends and buybacks than the company earned [6][7] - Management acknowledges near-term challenges but remains confident in operational strength, citing a 10th consecutive quarter of gross margin expansion and plans to manage expected annual tariff headwinds of $100 million through sourcing changes and targeted pricing [8]

Core Viewpoint - Investors should closely monitor The Clorox Company (CLX) stock due to significant movements in the options market, particularly the high implied volatility of the Jan. 16, 2025 $75 Call option [1] Company Analysis - The Clorox Company currently holds a Zacks Rank of 3 (Hold) within the Consumer Products – Staples industry, which is positioned in the bottom 18% of the Zacks Industry Rank [3] - Over the past 60 days, two analysts have raised their earnings estimates for the current quarter, while three have lowered theirs, resulting in a decrease of the Zacks Consensus Estimate from $1.50 per share to $1.46 [3] Options Market Insights - The high implied volatility surrounding The Clorox shares indicates that options traders are anticipating a significant price movement, which could suggest an upcoming event that may lead to a substantial rally or sell-off [2][4] - Seasoned options traders often seek out options with high implied volatility to sell premium, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected by expiration [4]

Core Viewpoint - The Clorox Company (NYSE:CLX) is facing mixed analyst sentiments, with price targets being adjusted downwards due to uncertainties in consumer staples, while some analysts remain optimistic about its growth potential through innovation and portfolio changes [2][3]. Group 1: Analyst Ratings and Price Targets - Bank of America analyst Anna Lizzul has lowered the price target for Clorox from $125 to $110, maintaining a Neutral rating, citing concerns over consumption growth in the consumer staples sector leading into 2026 [2]. - Jefferies has a more positive outlook, setting a price target of $102 based on a 26x multiple of its fiscal 2027 EPS estimate, highlighting the potential for growth through innovation and improved product mix [3]. Group 2: Company Performance and Metrics - Clorox shares have declined nearly 40% since the start of 2025, but the company's underlying performance has shown improvement since 2024, with revenue and profit trends stabilizing [4]. - A notable recovery in return on invested capital (ROIC) has been observed, now around 25%, indicating regained business discipline and efficiency [4]. Group 3: Company Overview - The Clorox Company is a US-based multinational that manufactures and markets consumer and professional products across cleaning, household, and lifestyle categories [5].

Core Viewpoint - Clorox, a Dividend King, is currently facing challenges but presents a strong investment opportunity due to its high dividend yield and potential for recovery [1][12][17] Group 1: Company Challenges - Clorox has experienced a nearly 60% decline from its peak stock price due to multiple issues, including increased production costs, inflation, and a severe cyberattack in 2023 that cost approximately $380 million [1][5][6] - The transition to new enterprise resource planning (ERP) software has also contributed to operational disruptions, impacting revenue and earnings [6][12] Group 2: Business Performance Indicators - Despite recent struggles, Clorox's revenue and profits have shown improvement since 2024, with a notable rebound in return on invested capital (ROIC), currently at 25%, aligning with pre-pandemic levels [7][9] - Clorox's product innovation and strong brand reputation help maintain its competitive edge, despite the commoditized nature of some of its products [10][11] Group 3: Dividend and Valuation - Clorox boasts a current dividend yield of nearly 5%, the highest in its history, and has a dividend payout ratio of 72% of next year's earnings estimates, which is manageable given its strong balance sheet [12][14] - The stock is currently undervalued with a price-to-earnings ratio of less than 15, suggesting potential for capital gains as the company regains market trust [16]

Core Viewpoint - The Clorox Company (NYSE:CLX) is highlighted as a potential investment opportunity amidst a challenging market for AI stocks, emphasizing the importance of diversification in investment portfolios [1][2]. Group 1: Company Overview - Clorox produces cleaning, household, and personal care products, as well as food and water-filtration items [2]. - The company has notable brands including Burt's Bees, Hidden Valley Ranch, Brita, Kingsford Charcoal, and Clorox itself [2]. Group 2: Market Performance - Clorox is described as "one of the worst stocks in the S&P 500 this year," indicating significant underperformance [2]. - The stock currently offers a yield of 4.72%, which may attract income-focused investors [2]. Group 3: Investment Sentiment - There is a concern that the current market may be missing a potential bottom for consumer packaged goods stocks, including Clorox, which have been affected by inflation and lack of growth [2]. - Despite the challenges, there is recognition of Clorox's potential as an investment, although some analysts suggest that certain AI stocks may present greater upside potential with less downside risk [2].

Group 1 - The article provides a market analysis covering major companies including Walt Disney Company, Comcast Corp, Exxon Mobil Corp, and Clorox Co [1] Group 2 - The analysis highlights the performance and strategic positioning of each company within their respective industries [1] - It discusses the financial metrics and market trends that could impact investment decisions related to these companies [1]

Core Insights - The Clorox Company is facing a challenging consumer environment with increased value-seeking behavior impacting pricing power [1] - Category growth has stabilized but remains below historical levels, with heightened competition for consumer spending [1] - Consumers are shifting towards smaller pack sizes and trade-down options due to financial pressures across income segments [1] Pricing Strategy - Clorox is utilizing price pack architecture and targeted promotions to maintain brand equity while ensuring affordability [2] - The company is expanding smaller-size offerings in brands like Brita, Food, and Kingsford, and promoting dilutable cleaners to appeal to cost-conscious consumers [2] Consumer Demand Trends - There is strong demand for larger, value-oriented formats in Club and eCommerce channels, indicating a polarized consumer response rather than outright resistance to pricing [3] - Clorox continues to identify areas where consumers are willing to pay a premium, particularly for convenience and time-saving products [3] Margin Pressure - In Q1 of fiscal 2026, Clorox's gross margin fell by 410 basis points due to lower fixed-cost absorption and increased manufacturing and logistics costs [4] - Management anticipates fiscal 2026 gross margin to trend towards the lower end of the guidance range of 50 to 100 basis points, influenced by ERP-related challenges and tariff uncertainties [5] Elasticity and Brand Health - Consumer elasticity is tightening, but Clorox's diversified approach balancing affordability and premium convenience positions the company favorably compared to simple price increases [6] - Brand health metrics such as household penetration and loyalty remain stable, suggesting selective resilience in pricing power despite a constrained consumer landscape [6] Stock Performance - Over the past six months, Clorox's shares have decreased by 16.7%, compared to an industry decline of 11.9% [7] - Clorox trades at a forward price-to-earnings ratio of 16.15X, which is lower than the industry average of 17.73X [9] Earnings Outlook - The Zacks Consensus Estimate for Clorox's fiscal 2026 earnings indicates a year-over-year decline of 24%, while fiscal 2027 earnings are expected to rise by 15.8% [10]

Core Viewpoint - The current bull market, ongoing for three years, is expected to continue into 2026, driven by increased AI capital expenditure and anticipated rate cuts [1] Group 1: Market Trends - The focus of bullish investors is on the boom in AI capital expenditure spending [1] - Expectations of rate cuts are contributing to the positive market outlook [1] Group 2: Investment Strategy - Long-term stock market investors are concentrating on strategic buying opportunities, particularly in dividend and value stocks [1] - This investment strategy has achieved a near 5-star rating on Tipranks.com and garnered over 9,000 followers on Seeking Alpha [1]

Core Insights - Clorox Company is increasing brand investments to enhance demand creation strategies, including higher trade spending and advertising, despite ERP-related disruptions [1][4] - The company is focused on innovation across major brands, with new product launches planned for the second half of fiscal 2026 [2] - Clorox's net sales fell 19% year over year to $1.43 billion in Q1 FY26, with organic sales decreasing 17% due to lower shipments related to the ERP transition [3][8] - For fiscal 2026, Clorox projects a net sales decline of 6-10% and organic sales to fall 5-9%, reflecting ongoing short-term pressures [3][8] - The company maintains advertising and promotional spending at approximately 11% of net sales to support long-term brand growth [4][8] Financial Performance - Clorox's shares have decreased by 16.4% over the past six months, compared to an industry decline of 11.9% [5] - The forward price-to-earnings ratio for Clorox is 16.35, which is lower than the industry average of 17.63 [7] - The Zacks Consensus Estimate indicates a 24% year-over-year decline in Clorox's fiscal 2026 earnings, but a projected rise of 15.8% in fiscal 2027 earnings [9]