
NYSE:CLX
This summary was created by AI, based on 4 opinions in the last 12 months.
Clorox Company, symbol CLX-N, is a dividend aristocrat that has faced various challenges in recent years, including a notable -11.83% decline this year and a 30% drop since the beginning of the year. The company's 5% dividend yield is a positive aspect, as it has a history of increasing dividends for 24 consecutive years, reflecting its commitment to shareholder returns. Analysts note its current trading at 17x PE, which is lower than historical valuations of 18-20x, suggesting potential upside. The normalization of supply chains and return to pre-war pricing in petrochemicals is encouraging, yet concerns over inflation and consumer preferences may impact their sales. The company’s earnings are finally finding a consistent upward trajectory, with expected growth of 6-8%, but its reliance on oil prices adds uncertainty amid geopolitical tensions.
Their biggest problem is that it is in “consumer staples”, a sector that is very expensive. These companies have very little scope for growth. There was expensive premiumization on a lot of these companies and not in a position to trade down as people wanted less expensive products. There was also a lot of reliance on growth in emerging markets, which has decelerated very sharply.
This is a part of the whole consumers package goods business that is under incredible pressure from commoditization. The stock has done very, very well. It had high PEs just because of the quality of their cash flow and that their brand names are recognized. Now that we are getting into higher interest rates, that is going to start to get squeezed. Maybe the weakening of the US$ will allow some foreign profits to come through a little better, but generally the group is under a lot of pressure from generics, etc. If you own it, you are not going to lose a lot of money.