Clorox CompanyCLX

Morningstar Rating

Stock Research and Analysis

by Erin Swanson, CFA

Although elevated commodity costs and challenging economic conditions have taken a toll on Clorox, we believe the firm's strategy of building share in midsize categories, expanding into overseas markets, and widening the penetration of brands in its Read more

Bulls Say

Clorox's household cleaning products, which include Clorox bleach, Glad trash bags, Formula 409, and Pine-Sol, enjoy strong brand recognition and healthy market share. The brands hold the number-one position in 11 of the 15 categories in which they compete domestically.

With the acquisition of Burt's Bees and the launch of its Green Works product line, Clorox is positioning itself to tap into the rapidly growing consumer trends toward health and wellness and environmentally friendly personal-care and cleaning products.

The firm's free cash flow as a percentage of sales is typically in the low double digits, allowing Clorox the flexibility to pay down debt, buy back shares, or increase dividends. Read more

Bears Say

Although some input costs have retreated from recent highs, prices for some commodities (such as pine oil, silicone, and clay) continue to increase, which could put further pressure on Clorox's profitability.

Clorox has rolled back the higher prices it had been charging on its Glad trash bag offerings, which are highly susceptible to private-label competition.

Much like other consumer product firms, Clorox has had difficulty over much of the past decade generating top-line growth in categories that have become commodified--like bleach and trash bags--where consumers are no longer willing to pay up for the value once associated with its brands.

We are concerned by Clorox's retailer concentration, given that more than 40% of its sales are derived from just five retailers. If any of these retailers experience a notable decline in traffic, it will most likely be reflected in Clorox's results. Read more

Strategy

Strategically, Clorox is focused on driving top-line growth in new and existing product categories that are likely to benefit from emerging consumer trends, like health and wellness. The firm intends Read more

Management

Donald Knauss took the reins at Clorox in October 2006. We believe that the industry experience he brings to the table from Procter & Gamble PG, PepsiCo PEP, and most recently Coca-Cola KO should benefit the firm and its shareholders, especially Read more

Profile

For nearly 100 years, Clorox has operated in the household product industry, expanding its portfolio to include such leading brands as Clorox, Glad, Hidden Valley, Kingsford, Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

What's Next for Dividends
Watch more