The Clorox Company

Clorox shares have fallen 9.3% since its fiscal fourth-quarter earnings report a month ago, underperforming the S&P 500, as the company faces margin pressure and a weak outlook. In the quarter, Clorox reported adjusted earnings of $1.66 per share, down 42% year over year but beating estimates by 1.2%, while net sales declined 2% to $1.95 billion, also beating consensus. The GOJO acquisition contributed about 10 percentage points to sales, but organic sales fell 13% due to ERP-related shipment comparisons. Gross margin contracted 520 basis points to 41.3% on higher commodity, manufacturing, and logistics costs. For fiscal 2027, Clorox expects net sales growth of 13-14% including 9.5 points from GOJO, with organic sales up 3.5-4.5%, and adjusted earnings between $5.70 and $6.00 per share, implying 3-8% growth. The company also guided to a gross margin of 42% and free cash flow of 11-13% of net sales. Analysts have revised estimates downward by 21.06% over the past month, and Clorox holds a Zacks Rank #4 (Sell).

Clorox projected a difficult fiscal 2027, warning that inflation and value-focused shoppers would offset recent cost savings. The company expects net sales to rise 13% to 14% for the current fiscal year, with roughly 9.5 percentage points of that growth coming from its acquisition of GOJO Industries, the maker of Purell hand sanitizer. Adjusted earnings per share are forecast at $5.70 to $6.00, representing growth of 3% to 8% over the prior year, while GAAP diluted EPS is expected between $5.41 and $5.71. Gross margin is projected at roughly 42%, as higher-than-normal inflationary headwinds and unfavorable product mix more than offset cost savings. Organic sales are expected to grow approximately 3.5% to 4.5%, with more than 3.5 percentage points of that growth coming from lapping the prior year's ERP-related inventory drawdown.

The Clorox Company expects fiscal 2027 inflation to exceed $200 million and targets free cash flow in the 11% to 13% range, executives said during the company's fourth-quarter fiscal 2026 earnings call. Executive VP and CFO Luc Bellet stated that inflation will be above $200 million, with the impact more pronounced in the first half of the year, and that the outlook assumes Brent crude oil at about $90 per barrel. CEO and Chairman Linda Rendle noted that categories are expected to remain muted amid value-seeking consumer behavior, but the company anticipates continued market share progress, citing turnarounds in Glad and Hidden Valley Ranch. Management highlighted early momentum for Clorox Purell and reiterated its commitment to the dividend, while acknowledging that the Litter business remains a persistent execution challenge. The CEO search is progressing as expected, and the company plans to use productivity and targeted pricing to navigate cost pressures.

As second-quarter earnings season begins, Seeking Alpha's Quant Rating system identifies 39 large-cap US stocks carrying Sell or Strong Sell ratings, reflecting weaker scores across valuation, growth, profitability, momentum, and earnings estimate revisions. Seven of these companies hold the lowest Strong Sell designation with Quant Ratings below 1.50: Crown Castle, SBA Communications, Honeywell, Strategy, Zoetis, Erie Indemnity, and Tractor Supply. The remaining 32 stocks are rated Sell, including widely followed names such as Coinbase Global, Blackstone, S&P Global, Domino's Pizza, Lennar, Clorox, and Fidelity National Information Services. While some of these companies have delivered positive share-price returns this year, their Quant Ratings suggest investors should watch for potential downside risks as quarterly results and guidance are released.

Clorox has lowered its fiscal 2026 guidance, now expecting net sales to decline about 6% and gross margin to contract, as the company faces flat net sales and higher manufacturing and logistics costs. Management’s revised outlook sharpens investor focus on whether upcoming fourth-quarter results can show progress in stabilizing margins. The lowered guidance frames a tougher near-term backdrop for the ERP benefits, innovation pipeline, and cost savings that many investors had counted on to support future earnings. Persistent cost inflation and tariff headwinds could have a larger and longer-lasting impact than expected, potentially eroding profitability and limiting the company’s flexibility to invest for growth.

Palm Valley Capital Management acquired a new position in The Clorox Company during the second quarter of 2026, alongside new stakes in Molson Coors Beverage Company and Vontier Corp. The firm noted that Clorox, which manufactures household and professional products under brands like Clorox bleach, Pine-Sol, and Glad, has faced a slow recovery from a 2023 cyberattack and ongoing disruptions from a large ERP implementation. In April, Clorox cut its fiscal 2026 outlook as price-sensitive consumers traded down to private-label alternatives. Palm Valley Capital views Clorox as a slow-growth consumer staples company with historically stable cash flows and acquired a small position near the lows, though shares have since bounced. The fund's investor class gained 1.80% in the second quarter, underperforming the S&P SmallCap 600's 19.7% return, partly due to a 75% allocation to cash equivalents.

Clorox shares have underperformed the Dow Jones Industrial Average over multiple time frames. The stock has declined 14.8% over the past three months, while the Dow gained 9.6%. On a year-to-date basis, Clorox fell 5.8% versus the Dow's 7.1% advance, and over the past 52 weeks it dropped 22.2% compared with the Dow's 22% return. The company cited ERP rollout disruptions, higher supply chain costs, competitive pressure in Litter and Food, and $20 million to $25 million in fourth-quarter oil-cost headwinds as factors weighing on performance. Clorox reported fiscal third-quarter adjusted earnings of $1.64 per share on revenue of $1.67 billion, both exceeding consensus estimates, but shares fell 9.7% the following session after it issued full-year adjusted EPS guidance of $5.45 to $5.65. Analysts rate the stock a consensus Hold with a mean price target of $99.87, implying a potential upside of 5.2% from current levels.

StockStory identifies Casella Waste Systems as a cash-producing stock to watch this week, while recommending selling Bentley Systems and Clorox. Casella, with a trailing 12-month free cash flow margin of 9.7%, posted annual revenue growth of 18.2% over the past two years and earnings per share growth of 24.2% annually, with forecasted revenue growth of 13% for the next 12 months. Bentley Systems, despite a 31.6% free cash flow margin, saw average annual recurring revenue growth of only 12.8% and estimated sales growth of 11.9%, with no operating margin improvement. Clorox, with a 5.6% free cash flow margin, experienced a 1.9% annual sales decline over three years and a 5.8 percentage point drop in free cash flow margin, trading at 15.9 times forward price-to-earnings.