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Monday, UBS analyst Peter Grom reiterated a Neutral rating on Clorox (NYSE:CLX) stock with a steady price target of $176.00. Grom forecasted the company's fiscal second-quarter earnings per share (EPS) at $1.39, slightly below the Visible Alpha consensus. Clorox is set to report its F2Q earnings after the market closes on February 3, 2025. According to InvestingPro data, 5 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting potential upside to current forecasts. The stock currently trades at a P/E ratio of 56.4x, which appears high relative to peers.
The analyst noted that sentiment towards Clorox has significantly improved over the past six months after facing challenges for several years. This positive shift is partly due to the belief that the company may have overcome its toughest hurdles, as well as the potential for Clorox to surpass its fiscal year 2025 guidance and Street estimates. Grom agreed that Clorox has upside potential relative to its peers, especially in a context where negative estimate revisions are expected for many in the Staples sector. InvestingPro data supports this optimistic outlook, showing a 6.17% revenue growth in the last twelve months and maintaining a strong financial health score. The company has also demonstrated remarkable consistency with 48 consecutive years of dividend increases.
UBS highlighted that the near-term outlook for Clorox appears relatively attractive, given the current market environment. However, the firm anticipates that investor focus will soon turn to Clorox's organic sales projections and the possibility of achieving on-algorithm top-line growth not just in the latter half of the year but also extending into fiscal year 2026. With a beta of 0.41, the stock has historically shown low volatility, making it an interesting consideration for stability-focused investors.
Grom expressed that due to various factors influencing the company, it has been challenging to assess if Clorox's underlying business has stabilized after a period of volatility. He indicated that more confidence and visibility in the company's ability to sustain organic growth in line with its algorithm would be necessary before adopting a more constructive stance on the stock.
In other recent news, Clorox has reported an impressive first-quarter earnings for fiscal year 2025, exceeding expectations with a substantial earnings per share beat and a robust 31% growth in organic sales. The company also announced a quarterly dividend of $1.22 per share, reflecting its commitment to shareholder value. Analysts from TD Cowen, DA Davidson, and Jefferies have adjusted their stance on Clorox, with TD Cowen upgrading the stock from Sell to Hold and DA Davidson increasing Clorox's price target to $171.00. However, Clorox projects a low-teens sales decrease for the second quarter due to volume pull-forward, but anticipates organic growth between 3% to 5% for the second half of the year. The company has also expanded its board with two new directors, Stephen Bratspies and Pierre Breber, as part of its strategic efforts to enhance its leadership and growth. These recent developments reflect Clorox's ongoing efforts to navigate the competitive landscape and deliver value to its investors.
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