We believe that California-based
The Clorox Company
), through its plans for further acquisitions and willingness to
grab alliance opportunities, will boost its market share and
product portfolio. Moreover, the company recently posted
better-than-expected fourth-quarter 2012 results. Driven by these
factors, we have upgraded our long-term recommendation on the stock
to 'Outperform' from 'Neutral'.
In the recently reported quarter, Clorox posted earnings of
$1.36 per share, ahead of the Zacks Consensus Estimate of $1.27,
and up 5.4% from the prior-year period's earnings. Sales for the
quarter grew 4% year over year to $1,541 million and also surpassed
the Zacks Consensus Estimate of $1,534 million.
The encouraging results were driven by benefits from cost-saving
initiatives, higher volumes, price increases, lower advertising
costs and tax rate. Additionally, contributions from new
businesses, which were acquired earlier in the year, drove sales
higher. Strong results as well as innovations across its brands
prompted management to guide fiscal 2013 sales growth in the range
of 2% - 4% and earnings per share between $4.20 and $4.35.
Clorox is one of the world's leading manufacturers of consumer
products. Furthermore, the company possesses a strong portfolio of
brands, including Clorox, Glad, Brita, Armor All, Burt's Bees, STP
and Kingsford, which offer a competitive edge to the company and
bolster its well-established position in the market.
Clorox has expanded its capabilities in the areas of health and
wellness by acquiring Aplicare Inc. and HealthLink, providers of
infection control products in the healthcare industry. The company
sees ample growth potential in the use of infection control
products. We believe that the acquisition has not only strengthened
its product offerings, but also its expertise, R&D and sales
Clorox is making intensive capital investments in information
technology systems and capabilities, particularly in the
international market, and R&D facilities to boost productivity
while providing platforms for growth, product innovation and cost
savings. The company believes that these initiatives will begin
delivering benefits later in fiscal 2014 and beyond.
Based on the above analysis and its strong fundamental outlook,
we expect Clorox to continue accelerating revenue and earnings
growth over the next few quarters. Our new long-term 'Outperform'
recommendation is supported by a Zacks #2 Rank (short-term Buy
Clorox competes with
Procter and Gamble Company
COLGATE PALMOLI (CL): Free Stock Analysis
CLOROX CO (CLX): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
To read this article on Zacks.com click here.