Clorox Tops Q2 Estimates, Lifts Earnings Outlook Despite Sales Decline

The Clorox Company (NYSE:CLX) shares plunged 6% intra-day today after the company reported third-quarter earnings and revenue below expectations and trimmed its full-year sales outlook amid shifting consumer behavior and macroeconomic headwinds.

The company posted adjusted earnings of $1.45 per share, missing analyst estimates of $1.57. Revenue declined 8% year-over-year to $1.67 billion, falling short of the $1.73 billion consensus. Organic sales, excluding currency and divestiture impacts, were down 2% for the quarter.

Clorox cited increased economic uncertainty as a key factor behind the results, noting that changes in consumer shopping patterns contributed to slower category performance. The company expects these headwinds to persist into the fourth quarter.

Despite the decline in top-line results, Clorox continued to improve its profitability, marking its tenth consecutive quarter of gross margin expansion. Gross margin rose 240 basis points year-over-year to 44.6%, reflecting progress on cost controls and operational efficiency.

For fiscal 2025, Clorox maintained its adjusted EPS guidance of $6.95 to $7.35 but lowered its organic sales growth forecast to 4–5%, down from a previous range of 5–6%.

The Clorox Company (NYSE:CLX) is a well-known name in the consumer products industry, offering a range of cleaning and household products. As it prepares to release its quarterly earnings on February 3, 2025, Wall Street analysts have set their expectations with an estimated earnings per share (EPS) of $1.39 and projected revenue of approximately $1.63 billion.

Despite these projections, Clorox is expected to face a decline in both revenue and earnings. The Zacks Consensus Estimate forecasts revenues at $1.64 billion, marking a 17.8% decrease from the same quarter last year. The consensus estimate for quarterly earnings has increased by 1.4% over the past week to $1.39 per share, yet this still represents a 35% decline from the previous year's figure.

Clorox has been navigating a challenging macroeconomic environment, with consumers under financial pressure. Increased advertising expenses have also impacted profitability. However, the company's IGNITE Strategy, which focuses on innovation, efficiency, and international expansion, positions Clorox for potential growth despite these challenges.

Clorox has a strong track record of surpassing earnings expectations, with an average earnings surprise of 27.47% over the past two quarters. In the most recent quarter, Clorox reported earnings of $1.86 per share, significantly exceeding the Zacks Consensus Estimate of $1.36 per share, resulting in a surprise of 36.76%. This consistent performance has led to positive revisions in earnings estimates, suggesting continued investor confidence.

The company's financial metrics reflect its market position. Clorox has a price-to-earnings (P/E) ratio of approximately 55.02, indicating investor willingness to pay $55.02 for every dollar of earnings. The price-to-sales ratio stands at about 2.63, and the enterprise value to sales ratio is approximately 2.98. These figures highlight Clorox's valuation relative to its sales and cash flow.

Clorox (NYSE:CLX) shares experienced a more than 8% drop intra-day today following the company's announcement of a cybersecurity breach.

Due to this security incident, Clorox is projecting a substantial decrease in Q1 net sales, ranging from 28% to 23% compared to the same quarter in the previous year. Organic sales are also expected to decline, with an estimated drop of 26% to 21% for the quarter. The cybersecurity attack has led to significant disruptions, including delays in processing orders and shortages of products.

The company now anticipates an adjusted EPS within the range of a loss of $0.40 to break even. This stands in contrast to its previous expectations of an increase in gross margin, as Clorox now foresees a lower gross margin compared to the same quarter in the prior year.

Regarding the situation, Clorox stated that it expects ongoing operational challenges in the second quarter but believes these disruptions will gradually diminish as the company progresses toward a return to normal operations.

After reporting its Q4 results, Clorox (NYSE:CLX) witnessed a significant surge of over 9% intra-day today. The company's earnings per share for the quarter were $1.67, which exceeded the Street estimate of $1.16.

Moreover, Clorox's revenue experienced a substantial growth of 12% year-over-year, reaching $2 billion, surpassing the Street estimate of $1.88 billion. This growth was primarily driven by a favorable price mix, partially offset by lower volume and unfavorable foreign exchange rates. For the full year 2024, the company has provided earnings per share outlook in the range of $5.60 to $5.90. This estimate is slightly higher than the Street estimate of $5.63. Additionally, Clorox expects its revenue to grow between 0% to 2% year-over-year.

After reporting its Q4 results, Clorox (NYSE:CLX) witnessed a significant surge of over 9% intra-day today. The company's earnings per share for the quarter were $1.67, which exceeded the Street estimate of $1.16.

Moreover, Clorox's revenue experienced a substantial growth of 12% year-over-year, reaching $2 billion, surpassing the Street estimate of $1.88 billion. This growth was primarily driven by a favorable price mix, partially offset by lower volume and unfavorable foreign exchange rates. For the full year 2024, the company has provided earnings per share outlook in the range of $5.60 to $5.90. This estimate is slightly higher than the Street estimate of $5.63. Additionally, Clorox expects its revenue to grow between 0% to 2% year-over-year.

Analyst at Deutsche Bank provided their outlook on The Clorox Company (NYSE:CLX) ahead of the company’s Q3 earnings results. Since the company’s disappointing Q2 results announcement, investor skepticism has grown and now encompasses the company's ability to navigate through evolving value-seeking behavior.

According to the analysts, most investors maintain caution on (1) EPS delivery both in the quarter and in Q4 should gross margin headwinds overshoot management’s own expectations, (3) the company's ability to take further pricing (particularly in the light of relative slowness in expanding pricing across the portfolio thus far), and therefore (3) cost/margin implications into 2023.

Given that the company's full-year organic growth outlook will likely to remain intact through Q3 results, the analysts said that credible reiteration of the company's gross margin outlook (and EPS) may serve as at least a near-term/temporary positive catalyst.

The analysts lowered their price target to $146 from $148, while maintaining their hold rating.