Sturdy past performances and an upbeat outlook facilitated the
The Clorox Company
) to reach a new 52-week high of $77.10 on Tuesday, Jan 22,
beating its previous 52-week high of $76.77 attained on Jan 14.
This Zacks Rank #3 (Hold) global consumer product company
eventually closed at its highest mark yesterday, representing a
healthy return of 11.4% over the past one year. Average
volume of shares traded over the last 3 months stands at
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Drivers that Triggered Momentum
An impressive record of beating the quarterly earnings
expectations, a positive fiscal 2013 outlook and a decent
dividend yield are the strengths that pushed the shares of Clorox
to new high.
With respect to earnings surprise, Clorox has been beating the
Zacks Consensus Estimate for the last eight quarters, most
recently topping by 6.3% in the first quarter of fiscal 2013.
Clorox reported first-quarter fiscal 2013 on Oct 31, 2012, with
earnings per share coming in at $1.01, ahead of the Zacks
Consensus Estimate of 95 cents but remained flat year over year.
The company's earnings benefited from improved revenue as well as
gross margins, offset by higher selling and administration
expenses as the company continues to invest in information
technology (IT) systems.
Net sales elevated 2.5% year over year to $1,338 million, mainly
on account of improved prices, offset in part by lower volumes
and unfavorable foreign exchange.
Looking ahead, Clorox reiterated its sales growth forecast of
2%-4% for fiscal 2013, driven by better categories growth, market
share gains and further product innovation across its brands. The
company expects operating income margin to expand by 25 to 50
basis points in fiscal 2013, on the back of strong cost savings,
the benefit of price increases and improved forecasts for
commodity costs. Moreover, Clorox continues to expect earnings in
the range of $4.20- $4.35 for fiscal 2013.
Clorox is also known for its shareholder friendly moves. In Nov
2012, the company announced a quarterly dividend of 64 cents per
share, payable on Feb 15, 2013 to the shareholders of record as
on Jan 23, 2013. This currently yields a solid 3.32%, while the
company has a payout ratio of 59%.
Since 1983, the company has increased its dividend from 1.875
cents to 64 cents. We believe that its continuous dividend
payment and increments reflect its earnings growth potential and
cash flow generation capabilities.
Besides Clorox, other consumer products companies like
Church & Dwight Co. Inc.
Procter & Gamble Company
) remain focused on improving shareholder value by paying regular
Stock's Key Indicators
Clorox currently trades at a forward P/E of 17.9x, slightly above
the peer group average of 17.8x. Again, its price-to-sales ratio
of 1.8 is in line with the peer group average. Moreover, the
company's return-on-investment (ROI) and return-on-asset (ROA)
are 32.2% and 12.5%, respectively, which are significantly higher
than the peer group average. The company's strong fundamentals
are well supported by its long-term estimated EPS growth rate of