The Clorox Company
) reached a new 52-week high of $76.77 on Monday, Jan 14, 2013,
beating its previous 52-week high of $76.74. The closing price of
this global consumer product company on Jan 14, 2013, was $76.60,
representing a solid return of 17.4% since Jan 3, 2012. Average
volume of shares traded over the last 3 months stands at
An impressive record of beating the quarterly earnings
expectations, a positive fiscal 2013 outlook, and a decent
dividend yield, are the major growth drivers for the shares of
With respect to earnings surprise, Clorox has been beating the
quarterly earnings expectations for the last eight quarters, most
recently topping by 6.3% in its fiscal 2013 first quarter.
On Oct 31, 2012, Clorox reported first-quarter fiscal 2013
earnings per share of $1.01, ahead of the Zacks Consensus
Estimate of 95 cents. Moreover, it remained flat year over year.
The company's earnings benefited from improved revenue as well as
gross margins, but 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 from
$1,305 million in the year-ago quarter, mainly on account of
improved prices, offset in part by lower volumes and unfavorable
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 in fiscal 2013.
Clorox rewards its shareholders through regular quarterly
dividends and increasing the same. In November 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 2.56%, while the company has a
payout ratio of 59%.
Since 1983, the company has increased its dividend by over 600
times from 1.875 cents to 64 cents. We believe that its
continuous dividend payment and increments reflects its earnings
growth capacity and cash flow generation.
Valuation is Attractive
Clorox currently trades at a forward P/E of 17.81x, slightly
above the peer group average of 17.69x. Again, its price-to-sales
ratio of 1.82 is in line with the peer group average. Moreover,
the company's return-on-investment (ROI) and return-on-asset
(ROA) are 32.3% and 12.5%, respectively, which are significantly
higher than the peer group average. Given the company's
compelling fundamentals and earnings surprise history in the last
eight quarters, we believe that its EPS growth will be higher
than the long-term expected growth of 8.4%.
About The Company
Headquartered in Oakland, California, Clorox is primarily
engaged in the production, marketing and sale of consumer
products in the U.S. and international markets. The company sells
its products primarily through mass merchandisers, grocery stores
and other retail outlets. Clorox markets some of the most trusted
and recognized brands, including its namesake bleach and cleaning
products. The company manufactures products in more than 24
countries and markets them in more than 100 countries. The
company has a market cap of approximately $9.99 billion.
Clorox, which competes with
Procter & Gamble Company
), currently holds Zacks Rank #3 (Hold) rating. Moreover, we are
maintaining a long-term 'Neutral' recommendation on the
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