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On Tuesday, Goldman Sachs analyst Bonnie Herzog revised the price target for Clorox (NYSE:CLX) stock, reducing it to $134 from the previous $138, while retaining a Sell rating on the shares. According to InvestingPro data, Clorox currently trades at a P/E ratio of 37.7x, suggesting a relatively high valuation, while the company maintains a "GOOD" overall financial health score. Ten analysts have recently revised their earnings estimates downward for the upcoming period. Herzog’s assessment followed Clorox’s fiscal third-quarter earnings report, which fell short of expectations on both revenue and earnings per share (EPS). The company experienced a 2% decline in organic sales, contrary to the slight growth anticipated by Goldman Sachs and Visible Alpha consensus estimates. InvestingPro data reveals that Clorox’s revenue has declined by approximately 2% over the last twelve months, with the company generating $7.2 billion in revenue and maintaining a healthy gross profit margin of 44.5%.
The lower organic sales were attributed to a decrease in consumption throughout the quarter, a trend observed across several consumer packaged goods (CPG) companies this earnings season. Despite the downturn in sales, Clorox saw a year-over-year gross margin expansion of approximately 240 basis points, reaching 44.6%. This improvement was mainly due to cost-saving measures that offset rising costs. However, unexpectedly high operating expenses resulted in an earnings miss, with EPS recorded at $1.45, below the consensus estimates of $1.55.
In response to the challenging market conditions, Clorox management has revised its full-year 2025 organic sales growth forecast to a range of 4-5%, a decrease from the previously projected 4-7%. Nonetheless, the company has maintained its EPS growth guidance between 13% and 19%. Management also provided an update on the anticipated impact from increased shipments as retailers stock up in preparation for Clorox’s upcoming enterprise resource planning (ERP) system transition. The expected boost to organic sales has been adjusted to 2-3 percentage points, up from the initial estimate of 1-2 points, which Herzog finds surprising given the current slowing demand.
With the updated figures and market context in mind, Goldman Sachs has lowered its EPS estimates for Clorox and adjusted the price target accordingly. The firm continues to advise a Sell position on Clorox stock, expressing caution about the high end of the company’s revised sales guidance in a market where retailers might reduce inventory levels due to weaker consumer spending. Despite these challenges, InvestingPro analysis highlights Clorox’s impressive 48-year streak of consecutive dividend increases, with a current dividend yield of 3.5%. For deeper insights into Clorox’s financial health and future prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of key metrics and growth drivers.
In other recent news, Clorox Company reported its first-quarter 2025 earnings, missing both earnings per share (EPS) and revenue forecasts. The EPS was reported at $1.45, falling short of the anticipated $1.57, while revenue reached $1.67 billion, below the expected $1.73 billion. The company continues to project an organic sales growth guidance of 2% for fiscal 2025. Additionally, Clorox is managing ongoing challenges such as tariff impacts, which are estimated to have a $100 million annual effect. Despite these financial setbacks, Clorox’s gross margin is expected to expand to 44% in the fourth quarter, reflecting strong cost management. The company is also navigating its ERP transition, with plans to mitigate potential disruptions. Analysts from firms like Morgan Stanley (NYSE:MS) and Citi have engaged Clorox’s leadership regarding category weaknesses and promotional activities, highlighting investor concerns about the company’s ability to maintain its market position amid economic uncertainties.
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