Clorox Shares at All-Time High - Analyst Blog
Shares of The Clorox Company ( CLX ) hit an all-time high of $80.86 on Monday, Feb 4, just after the company reported a better-than-expected second-quarter results and an upbeat outlook for fiscal 2013. This Zacks Rank #3 (Hold) global consumer product company eventually closed at its highest mark of $79.72 yesterday, representing a healthy return of 18.1% over the last one year. Average volume of shares traded over the last 3 months stands at approximately 923,319.
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 factors that enabled the shares of Clorox to reach a new high.
With respect to earnings surprise, Clorox has been beating the Zacks Consensus Estimate for the last 9 quarters, most recently topping it by 11.1% in the second quarter of fiscal 2013.
Yesterday, Clorox came up with impressive earnings and sales comparisons for the second quarter of fiscal 2013. The company's adjusted earnings of 90 cents per share jumped approximately 13.9% from the year-ago quarter's earnings of 79 cents and beat the Zacks Consensus Estimate of 81 cents.
The company's earnings benefited from improvements in revenues as well as gross margins, offset by higher selling and administration expenses as it continues to invest in information technology (IT) systems.
Net sales elevated 8.5% year over year to $1,325 million from $1,221 million in the year-ago quarter, mainly due to improved prices and volumes. Moreover, total revenue came in ahead of the Zacks Consensus Estimate of $1,270 million. Total volume increased 5% from the comparable quarter last year.
Bolstered by better-than-expected quarterly performance, Clorox raised its sales growth forecast to 3%-5% for fiscal 2013 from 2%-4% forecasted earlier, driven by better category-wise performances, 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 flat commodity costs forecasts. Further, the company now anticipates annual earnings of $4.25-$4.35 per share in fiscal 2013, up from the previous guidance range of $4.20-$4.35.
Clorox is also known for its shareholder friendly moves. Since 1983, the company has increased its dividend from 1.875 cents to 64 cents. This currently yields a solid 3.21%, while the company has a payout ratio of 59%. We believe that its continuous dividend payments and increments reflect the growth potential of its earnings and cash flow generation capabilities.
Besides Clorox, other consumer products companies like Ecolab Inc. ( ECL ), Church & Dwight Co. Inc. ( CHD ) and Procter & Gamble Company ( PG ) also focus on improving shareholder value by paying regular quarterly dividends.
Stock's Key Indicators
Clorox currently trades at a forward P/E of 18.52x, slightly above the peer group average of 18.47x. Again, its price-to-sales ratio of 1.86 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 8.4%.
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
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PROCTER & GAMBL (PG): Free Stock Analysis Report
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