The Clorox Company Unveils Home Care Redefined: A Look at How Americans Are Reimagining Time, Wellness, and Convenience at Home [Accessibility Statement] Skip Navigation- Convenience is being reimagined: consumers now value ease and enjoyment over sheer speed in their everyday routines- Awareness of the home's influence on family health is rising, and younger generations are taking a more proactive, wellnessfocused approach to home care- Report underscores the evolution of home care from a string of chores ...

Core Viewpoint - Clorox's 4.07% dividend yield is attractive but faces challenges due to operational turbulence and margin pressure, raising questions about sustainability in the face of potential risks ahead [1][2] Dividend Performance - Clorox paid $1.24 per share on February 13, 2026, marking 48 consecutive years of dividend increases, with a total dividend payout of $602 million for fiscal 2025 [1] - The company generated $981 million in operating cash flow, resulting in a 61.4% payout ratio, indicating adequate coverage of the dividend [1] - Free cash flow for fiscal 2025 was $761 million, providing 1.26x coverage after capital expenditures, a recovery from fiscal 2024's 0.81x coverage [1][2] - The dividend has grown 33.8% from $450 million in fiscal 2018 to $602 million in fiscal 2025, with a compound annual growth rate of approximately 5.2% [1] Yield Context - Clorox's 4.07% yield is significantly higher than Procter & Gamble's 2.63% and Kimberly-Clark's 4.76%, reflecting investor skepticism about Clorox's near-term prospects [1] - The stock has seen a year-to-date gain of 26.21% as of February 12, 2026, but is down 11.86% over the past year and 20.32% over five years, indicating a depressed stock price of $125.82 [1] Operational Challenges - Clorox's gross margin has compressed to 43.2% due to consumers opting for cheaper alternatives, with management projecting only flat to 1% organic growth for the latter half of fiscal 2026 [1] - The company's profit margin of 11.2% and operating margin of 14.1% are below those of Procter & Gamble, highlighting an efficiency disadvantage [1] Strategic Moves - Clorox's $2.25 billion acquisition of GOJO Industries aims to strengthen its health and hygiene portfolio but introduces integration risks during a challenging operational period [1] - The company faces a $14.15 million fine from the Consumer Product Safety Commission for delayed warnings about bacterial contamination in Pine-Sol products, involving 37 million bottles recalled [1] Future Outlook - Management has reaffirmed fiscal 2026 adjusted earnings guidance of $5.95 to $6.30 per share, projecting gross margin expansion in the latter half of the year [1] - The upcoming CAGNY Conference on February 19, 2026, will be critical for investors to assess guidance for fiscal 2027 and the timeline for margin recovery [2]

Core Insights - The Clorox Company, based in Oakland, California, has a market capitalization of $14.5 billion and is known for its well-established brands such as Clorox, Pine-Sol, Glad, Burt's Bees, and Hidden Valley [1] Performance Overview - Over the past 52 weeks, Clorox shares have declined by 18.1%, underperforming the S&P 500 Index, which increased by 15.6%. However, year-to-date (YTD), Clorox stock is up 19.5%, outperforming the S&P 500's 1.7% return [2] - Clorox has also underperformed the State Street Consumer Staples Select Sector SPDR ETF (XLP), which rose by 9.1% over the past 52 weeks, but has outpaced XLP's 12.2% YTD increase [3] Earnings Report - On February 3, Clorox shares rose by 1.5% following a mixed Q2 earnings release. The company's revenue slightly decreased year-over-year to $1.7 billion but exceeded Wall Street expectations by 2.5%. Adjusted EPS fell by 10.3% from the previous year to $1.39, missing analyst expectations of $1.43 [4] Future Earnings Expectations - For the current fiscal year ending in June, analysts project Clorox's EPS to decline by 23.3% year-over-year to $5.92. The company's earnings surprise history is mixed, with two out of the last four quarters exceeding consensus estimates and two missing [5] Analyst Ratings - Among 18 analysts covering Clorox, the consensus rating is a "Hold," consisting of one "Strong Buy," 13 "Hold," and four "Strong Sell" ratings [5] - Morgan Stanley analyst Dara Mohsenian maintained a "Hold" rating on Clorox with a price target of $136, indicating a potential upside of 12% from current levels. The company is currently trading above its mean price target of $116.27, while the highest price target of $151 suggests a potential upside of 24.3% [7]

Core Viewpoint - Consumer stocks are recognized for their ability to generate substantial dividend income, supported by a loyal customer base that ensures consistent profits and cash flow for shareholders [1]. Group 1: Realty Income - Realty Income is a REIT focused on single-tenant commercial properties, with over 15,500 properties and a client base including Home Depot and Dollar General [3][4]. - The company has maintained a monthly dividend since 1994, currently paying $3.24 per share annually, resulting in a dividend yield of 5.3%, significantly higher than the S&P 500 average of 1.1% [4][6]. - Realty Income's stock trades at 15 times its FFO income, indicating potential for stock price appreciation alongside its generous dividend [7]. Group 2: Target - Target operates nearly 2,000 locations across the U.S., with over 75% of Americans living within 10 miles of a store [8]. - Despite recent struggles, including inventory issues and political controversies, Target has a P/E ratio of 13, which is lower than competitors like Walmart and Costco [9][12]. - As a Dividend King with 54 years of dividend increases, Target's annual payout is $4.56 per share, yielding 4.3%, and plans for a $5 billion investment in store remodels and technology could revitalize the business [12][13]. Group 3: Clorox - Clorox is known for its cleaning products and other brands like Kingsford and Burt's Bees, but faced challenges post-pandemic, including inflation and a cyberattack [14]. - The stock price decline has resulted in a P/E ratio of 18, near a multiyear low, while the annual dividend payout of $4.96 per share yields 4.4% [15][16]. - Improvements from an ERP implementation could enhance efficiencies, and brand loyalty may support Clorox's recovery despite inflation concerns [17].

Core Viewpoint - The article discusses consumer stocks that are positioned for significant stock recovery and continued dividend growth, emphasizing the importance of dividend investing over growth investing [1][2]. Clorox - Clorox is known for its bleach and owns other brands like Pine-Sol and Burt's Bees, benefiting from increased cleanliness demand during the COVID-19 pandemic [3]. - The stock has lost about 50% of its value over the last five years due to inflation, a cyberattack, and ERP software transition challenges [3]. - Clorox's current market cap is $13 billion, with a stock price of $109.98 and a dividend yield of 4.47%, supported by a consistent annual payout increase for 49 years [4][5]. - The investment in ERP software is expected to enhance efficiency, and the stock's P/E ratio of 17 suggests potential for dividend growth and stock price recovery [6]. Target - Target operates approximately 2,000 stores across the U.S. and has faced challenges such as rising inventories and falling sales post-pandemic [7][8]. - The stock has started to recover from its November low, with a current price of $111.14 and a dividend yield of 4.06%, marking it as a Dividend King with 54 years of payout increases [10]. - Target's P/E ratio is 13, significantly lower than competitors like Walmart and Costco, which trade at 42 and 51 times earnings, respectively, indicating potential for stock price recovery alongside rising dividends [11].

Core Insights - Clorox Company (CLX) is a prominent player in the consumer staples sector, supported by a portfolio of trusted household brands that cater to everyday consumer needs, demonstrating resilience despite a challenging operating environment marked by cautious consumer spending [1][2] Group 1: Growth Potential - Clorox benefits from a strong brand portfolio, including Clorox, Glad, Kingsford, and Burt's Bees, which have high household penetration and consumer trust, allowing the company to maintain pricing resilience even as consumers become more value-conscious [3] - The successful implementation of a new ERP system is expected to enhance operational efficiency, improve inventory visibility, and support margin recovery over time, despite initial disruptions [4] - Innovation is central to Clorox's growth strategy, with the company focusing on new product introductions and expanding existing platforms to address changing consumer behaviors and regain market share [5] - Clorox's disciplined financial management, including strong cash flow generation and prudent capital allocation, supports its growth outlook and enhances shareholder confidence [6] Group 2: Challenges - Clorox faces near-term sales pressure due to muted category growth and the aftereffects of its ERP system implementation, which led to temporary out-of-stocks and market share losses [7] - The company operates in a competitive environment, particularly in value-sensitive categories, where increased promotional activity from competitors has intensified price competition, potentially limiting short-term share gains [8] - Evolving consumer behavior, with a focus on value amid economic uncertainty, has resulted in negative price/mix dynamics, which may challenge Clorox's ability to drive margin expansion [10] Group 3: Market Performance - Clorox shares have declined by 30.7% over the past year, underperforming the Zacks Consumer Products – Staples industry's decline of 10.7% and the broader Consumer Staples sector's growth of 4.8% [11] - The current forward 12-month price-to-earnings (P/E) ratio for Clorox is 17.51X, which is a modest discount compared to the industry average of 18.36X [14]

Core Viewpoint - Clorox's significant stock sell-off has been excessive, presenting a potential value opportunity for contrarian investors in 2026, especially given its current dividend yield of 4.9% [1][11]. Company Challenges - Clorox has faced self-inflicted challenges alongside broader sector slowdowns, including consumer spending declines and cost pressures from inflation and tariffs [2]. - The company is undergoing a multiyear turnaround focused on maximizing brand value and enhancing internal processes to reduce costs and improve margins [3]. Transition Period - Clorox is in a transition phase as it implements a new enterprise resource planning (ERP) system, which has led to outdated operations and vulnerabilities, including a cyberattack in 2023 [4]. - The ERP transition has resulted in unusually high shipments to retail partners, leading to reduced demand at the start of fiscal 2026, with projected organic sales growth declining by 5% to 9% [5]. Market Position and Brand Strength - Clorox's brands are predominantly category leaders, with approximately 80% of its brands ranking No. 1 or No. 2 in their respective categories, which positions the company well to adapt to changing consumer preferences [10]. - The company is addressing affordability concerns by offering smaller packaging and bulk options to consumers facing financial pressures [9]. Financial Health and Dividend Policy - Clorox has a strong dividend history, having raised its quarterly dividend to $1.24 per share, marking the 48th consecutive annual increase, and is on track to become a Dividend King by 2027 [12]. - The company's earnings and free cash flow continue to exceed dividend expenses, with a manageable total net long-term debt of less than $3 billion and a debt-to-equity ratio of 0.2 [13]. Investment Outlook - Despite current lackluster growth and weak near-term expectations, Clorox presents a high-yield investment opportunity for patient investors with a long-term horizon [16]. - The company's recent strategic decisions, including the ERP transition and divestments, may position it for future growth when consumer spending rebounds [17].

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 - 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].