Here's How Clorox (CLX) is Placed Ahead of Q3 Earnings Release

The Clorox Company CLX is likely to register a decline in the top and bottom lines when it reports third-quarter fiscal 2024 results on Apr 30, 2024, before market open.

The Zacks Consensus Estimate for quarterly revenues is pegged at $1.88 billion, suggesting a decrease of 1.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has declined 1.5% in the past 30 days to $1.33 per share. The consensus mark indicates an 11.9% decline from $1.51 reported in the prior-year quarter.

The consumer and professional products company has a trailing four-quarter earnings surprise of 127.8%, on average. CLX delivered a significant earnings surprise of 100% in the last reported quarter.

The Clorox Company Price and EPS Surprise

The Clorox Company Price and EPS Surprise

The Clorox Company price-eps-surprise | The Clorox Company Quote

Factors to Consider

Clorox has been witnessing volume growth and gains from the recovery plan implemented after the August cyberattack. This resulted in tremendous improvement in the top and bottom lines in the last reported quarter. Additionally, the company has been witnessing favorable gross margin trends on better cost absorption from strong shipment growth.

CLX is making progress in rebuilding retailer inventories ahead of schedule. Clorox has been benefiting from pricing strategies and cost-saving initiatives. These traits are expected have aided performance in the to-be-reported quarter.

Clorox is on track with its IGNITE strategy, which aims at growth by focusing on innovation, digital commerce and brand building. It remains committed to streamlining its operating model, which is likely to improve efficiency and drive productivity. The implementation of this new model is likely to be completed in fiscal 2024. Gains from the IGNITE strategy are expected to have aid fiscal third-quarter results.

Despite these positives, the company is not yet out of the woods. CLX’s revenues for the fiscal third quarter are expected to have been impacted by supply-chain inflation and soft volumes due to the cyberattack that occurred in August.  

Moreover, the company’s results are expected to be marred by rising SG&A expenses, resulting from accelerated investments in digital capabilities, implementation of the streamlined operating model and expenses incurred for the cyberattack. This is expected to have resulted in margin pressure in the to-be-reported quarter.

Our model predicts gross profit to decline 1.8% from a year ago in the fiscal third quarter, with gross margin likely to contract 50 basis points. The soft gross margin can be attributed to soft revenues and elevated cost of products sold due to the inflationary environment.

Price Performance & Valuation

Amid the challenges, Clorox stock has showed resilience year to date. The stock has notched a decent gain of 2.7% in the year-to-date period. However, it reflects slowed trends compared with the industry’s rally of 9.6%.

Zacks Investment Research
Image Source: Zacks Investment Research

Clorox shares are somewhat expensive on a relative basis. The stock has a forward 12-month P/E ratio of 23.66, trading at a premium to Zacks Soaps and Cleaning Materials industry’s average of 22.43 and S&P 500’s average of 20.76. This elevated valuation raises questions about whether investors are overly optimistic about its future growth prospects or if there are underlying risks not fully taken into consideration.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Clorox this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Clorox has an Earnings ESP of +1.90% and a Zacks Rank #3.

Other Stocks With Favorable Combination

Here are some other companies that also have the right combination of elements to post an earnings beat this season.

Church & Dwight Co., Inc. CHD currently has an Earnings ESP of +1.00% and a Zacks Rank #3. CHD is anticipated to register top and bottom-line growth when it reports first-quarter 2024 results. The Zacks Consensus Estimate for Church & Dwight’s quarterly revenues is pegged at $1.5 billion, indicating an increase of 4.3% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Church & Dwight’s bottom line has been unchanged in the past 30 days at 86 cents per share. The consensus estimate for earnings suggests a rise of 1.2% from the prior-year quarter’s reported figure. CHD has delivered earnings beat of 9.7%, on average, in the trailing four quarters.

The Estée Lauder Companies Inc. EL currently has an Earnings ESP of +5.35% and a Zacks Rank #3. The company’s top and bottom lines are expected to increase from the prior-year levels when it reports first-quarter 2024 results. The Zacks Consensus Estimate for EL’s quarterly revenues is pegged at $3.9 billion, suggesting a rise of 4.6% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for EL’s quarterly earnings per share (EPS) is pegged at 48 cents, which indicates a 2.1% increase from the year-ago reported figure. EL has a trailing four-quarter earnings surprise of 120.2%, on average.

The Hershey Company HSY has an Earnings ESP of +1.42% and a Zacks Rank #3 at present. The company’s top and bottom lines are expected to increase from the year-earlier levels when it reports first-quarter 2024 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.1 billion, which suggests growth of 4.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for HSY’s quarterly EPS has been unchanged in the past 30 days at 2.72. The consensus estimate for earnings shows a decline of 8.1% from the year-ago quarter’s reported figure. HSY has delivered an earnings surprise of 6.5%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Hershey Company (The) (HSY) : Free Stock Analysis Report

The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report

The Clorox Company (CLX) : Free Stock Analysis Report

Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.