Breaking Down The Clorox Company (CLX) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for stable, reliable stocks? Have you considered The Clorox Company (CLX)? With a market capitalization of $19.8 billion, understanding its financial health is crucial for making informed decisions. In fiscal year 2024, Clorox reported a 4% decrease in net sales, but don't let that deter you just yet. The company's gross margin increased by 360 basis points to 43.0%, and diluted EPS saw an impressive 88% increase to $2.25. How did Clorox manage this margin expansion and EPS growth? What strategic moves, like the divestiture of the Argentina business and the Better Health Vitamins, Minerals and Supplements (VMS) business, are shaping its future? Dive in to explore these key insights and more, and discover whether Clorox deserves a spot in your investment portfolio.

The Clorox Company (CLX) Revenue Analysis

Analyzing The Clorox Company's financial health involves a close examination of its revenue streams, growth rates, and the contributions of its various business segments. Understanding these elements provides investors with key insights into the company's performance and future prospects.

The Clorox Company's revenue is derived from a diverse portfolio of products spanning multiple categories:

• Cleaning and Disinfecting: Products like Clorox bleach, disinfecting wipes, and sprays.
• Household Products: Includes Glad trash bags and food storage containers.
• Lifestyle: Comprises brands such as Burt's Bees and Brita water filters.
• Professional Products: Cleaning and disinfecting solutions for commercial use.

The Clorox Company's fiscal year ends in June. For the fiscal year 2024, The Clorox Company reported net sales of $7.4 billion. Looking at the historical trends, the year-over-year revenue growth rate provides valuable insights. In fiscal year 2023, the company reported net sales of $7.1 billion, which indicates a growth of approximately 4.2% in fiscal year 2024.

A closer look at the different business segments reveals their respective contributions to the overall revenue:

In fiscal year 2024:

• Health and Wellness: This segment accounted for 38% of net sales.
• Household: Represented 33% of net sales.
• Lifestyle: Contributed 22% of net sales.
• International: Accounted for the remaining 7% of net sales.

Significant changes in revenue streams often stem from strategic acquisitions, divestitures, or shifts in consumer behavior. For instance, increased demand for cleaning and disinfecting products during specific periods can substantially boost the Health and Wellness segment's contribution. Monitoring these shifts is crucial for assessing the company's adaptability and resilience. Investors can gain additional insights into The Clorox Company's strategic direction and values by exploring their Mission Statement, Vision, & Core Values of The Clorox Company (CLX).

The Clorox Company (CLX) Profitability Metrics

Assessing The Clorox Company's financial health requires a detailed look into its profitability metrics. These metrics provide insights into how efficiently the company generates profit from its revenue and assets. A thorough analysis includes examining gross profit, operating profit, and net profit margins, as well as comparing these figures against industry benchmarks and historical trends.

For the fiscal year 2024, The Clorox Company reported a gross profit of $3.25 billion. The gross profit margin, which is gross profit divided by net sales, stood at 44.2%. This indicates the company's efficiency in managing its cost of goods sold (COGS) relative to its sales revenue. Monitoring the trend of the gross margin is crucial, as improvements often reflect enhanced operational efficiencies or better cost management strategies.

The operating profit for the same period was $894 million, resulting in an operating profit margin of 12.1%. This metric reflects the company's profitability from its core business operations, excluding interest and taxes. Analyzing the operating margin helps investors understand how well Clorox controls its operating expenses, such as selling, general, and administrative costs.

Net profit, also known as net income, amounted to $602 million for fiscal year 2024, translating to a net profit margin of approximately 8.2%. The net profit margin is a comprehensive measure of overall profitability, taking into account all revenues and expenses, including taxes and interest. A higher net profit margin suggests that Clorox is effectively converting revenue into profit after all costs are considered.

Here's a summary of Clorox's profitability metrics for fiscal year 2024:

When evaluating The Clorox Company's profitability, it's important to consider these metrics in the context of industry averages. Comparisons with competitors and historical performance provide a more nuanced understanding of whether Clorox is outperforming or underperforming relative to its peers. Significant deviations from industry averages may signal competitive advantages or areas needing improvement.

Operational efficiency is a critical driver of profitability. Effective cost management and favorable gross margin trends directly impact the bottom line. For instance, Clorox's ability to streamline its supply chain, negotiate better terms with suppliers, or optimize production processes can lead to higher gross margins. These improvements, in turn, enhance overall profitability and shareholder value.

Investors and analysts often monitor key profitability ratios to assess a company's financial health and performance. These ratios offer insights into how well a company manages its costs, generates profits from its sales, and creates value for its shareholders. Monitoring these trends over time provides a comprehensive view of the company’s financial trajectory. For more in-depth analysis, you can check out: Breaking Down The Clorox Company (CLX) Financial Health: Key Insights for Investors

The Clorox Company (CLX) Debt vs. Equity Structure

Understanding how The Clorox Company (CLX) manages its debt and equity is crucial for investors assessing its financial stability and growth potential. The balance between debt and equity reveals insights into the company's risk profile and financing strategies.

Here's an overview of The Clorox Company's debt levels:

• Long-term Debt: As of December 31, 2023, The Clorox Company's long-term debt stood at $2.4 billion.
• Short-term Debt: The company's short-term debt or current portion of long-term debt was approximately $100 million.

The debt-to-equity ratio is a key metric for evaluating a company's financial leverage. For The Clorox Company (CLX):

• The debt-to-equity ratio can be calculated using the total liabilities and total equity from the balance sheet. As of December 31, 2023, total liabilities were $6.294 billion and total equity was $775 million, resulting in a high debt-to-equity ratio.
• Compared to the industry standards, a high debt-to-equity ratio suggests that The Clorox Company relies more on debt financing than equity.

Recent financial activities provide additional context:

• In November 2023, The Clorox Company issued $500 million aggregate principal amount of 5.150% Senior Notes due 2033.
• The company often manages its debt through refinancing activities to take advantage of favorable interest rates or to extend the maturity of its debt.

The Clorox Company strategically balances debt and equity to fund its operations and growth initiatives:

• Debt financing can provide capital for acquisitions, expansions, and other investments.
• Equity funding, on the other hand, can strengthen the balance sheet and reduce financial risk.
• The company's approach to balancing debt and equity reflects its overall financial strategy and risk management practices.

Here's a summary of key financial data:

For more insights into The Clorox Company's financial health, check out: Breaking Down The Clorox Company (CLX) Financial Health: Key Insights for Investors

The Clorox Company (CLX) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and long-term liabilities, respectively. For investors in The Clorox Company (CLX), assessing these metrics provides insight into the company's stability and operational efficiency.

Assessing The Clorox Company's Liquidity:

Analyzing liquidity involves examining the current and quick ratios, working capital trends, and cash flow statements.

• Current and Quick Ratios: These ratios measure a company's ability to cover its short-term liabilities with its short-term assets.
  • The current ratio is calculated as current assets divided by current liabilities.
  • The quick ratio, also known as the acid-test ratio, excludes inventories from current assets, providing a more conservative measure of liquidity.

For the fiscal year 2024, The Clorox Company reported a current ratio of 1.21, and a quick ratio of 0.68. These figures indicate the company's capacity to meet its immediate financial obligations. A current ratio above 1 suggests that The Clorox Company has more current assets than current liabilities.

• Analysis of Working Capital Trends: Working capital, defined as current assets minus current liabilities, reflects a company's operational liquidity. Monitoring trends in working capital can reveal whether a company's short-term financial health is improving or deteriorating.

In 2024, The Clorox Company's working capital stood at $224 million. Analyzing the trend of working capital over several periods provides a clearer picture of the company’s liquidity management.

• Cash Flow Statements Overview: The cash flow statement provides a detailed look at how a company generates and uses cash through its operating, investing, and financing activities.

Here’s an overview of The Clorox Company's cash flow activities for the fiscal year 2024:

• Operating Activities: Cash generated from the company's core business operations. A positive cash flow from operations indicates that the company is effectively generating cash from its products and services. The Clorox Company's operating cash flow for 2024 was $897 million.
• Investing Activities: Cash flow related to the purchase and sale of long-term assets, such as property, plant, and equipment. A negative cash flow in this category often indicates investments in the company's future growth. The Clorox Company reported $(148) million in cash flow from investing activities.
• Financing Activities: Cash flow related to debt, equity, and dividends. This category includes activities such as issuing or repurchasing stock, borrowing money, and paying dividends. The Clorox Company's financing activities resulted in a cash outflow of $(613) million, primarily due to dividend payments and debt management.

Potential Liquidity Concerns or Strengths:

While The Clorox Company demonstrates a positive cash flow from operating activities, potential liquidity concerns may arise from negative cash flow in investing and financing activities. Effective management of working capital and strategic allocation of cash resources are essential for maintaining a healthy liquidity position. The company's ability to generate consistent operating cash flow is a significant strength, providing a buffer against short-term financial challenges.

Investors can gain additional insights into The Clorox Company's values by examining its Mission Statement, Vision, & Core Values of The Clorox Company (CLX).

The Clorox Company (CLX) Valuation Analysis

Assessing whether The Clorox Company (CLX) is overvalued or undervalued involves examining several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios, and analyst consensus.

Currently, the P/E ratio can provide insights into how much investors are willing to pay for each dollar of Clorox's earnings. Comparing this ratio to industry averages and historical data helps determine if the stock is trading at a premium or discount. As of February 2024, The Clorox Company's P/E ratio stood at 39.86, which is above the industry median of 21.49, suggesting it may be overvalued compared to its peers.

The P/B ratio, which compares a company's market capitalization to its book value, is another tool for valuation. A lower P/B ratio might indicate undervaluation. The recent data shows Clorox's P/B ratio is 8.28, higher than the industry median of 2.61, reinforcing the possibility of overvaluation.

The EV/EBITDA ratio offers a more comprehensive valuation measure by considering debt. As of February 2024, Clorox's EV/EBITDA ratio is 16.48, while the industry median is 12.71. This again points towards a potentially overvalued status.

Analyzing stock price trends over the past year is crucial. Monitoring whether the stock has been consistently rising, falling, or trading sideways provides context on market sentiment and investor confidence. From April 2024 to April 2025, The Clorox Company (CLX) experienced price fluctuations, reflecting broader market trends and company-specific events.

Here is a snapshot of CLX's stock performance:

• As of July 26, 2024, the stock closed at $138.48, marking a 0.25% decrease.
• The Simple Moving Average (SMA) for 50 days was $139.42, and for 200 days, it was $144.48.
• The Moving Average Convergence Divergence (MACD) was -0.64.
• The Average True Range (ATR) over the last 14 days was 1.41.
• The Relative Strength Index (RSI) was at 43.96.

Dividend yield and payout ratios are significant for income-focused investors. A higher dividend yield can make a stock more attractive, but it's essential to ensure the payout ratio is sustainable. Clorox has a dividend yield of approximately 3.31% as of January 2024, with a forward dividend of $4.84. The payout ratio needs to be assessed to ensure the company can comfortably cover its dividend payments.

Analyst consensus provides a summarized view of professional opinions on the stock. These ratings typically range from 'buy' to 'sell,' offering a quick gauge of overall sentiment. As of April 2025, analyst ratings should be considered alongside other valuation metrics to form a well-rounded opinion.

A summary of key valuation metrics is below:

In conclusion, a comprehensive valuation analysis requires a blend of quantitative metrics and qualitative insights to determine whether The Clorox Company is accurately priced by the market. Read more about Clorox's financial health: Breaking Down The Clorox Company (CLX) Financial Health: Key Insights for Investors

The Clorox Company (CLX) Risk Factors

Several internal and external factors can significantly impact The Clorox Company's financial health. These risks span industry competition, regulatory changes, and overall market conditions. Understanding these potential challenges is crucial for investors.

Industry Competition: The Clorox Company faces intense competition across its various product categories. This competition can pressure pricing and market share, affecting profitability. Competitors range from large multinational corporations to smaller, niche brands. Maintaining a competitive edge requires continuous innovation, effective marketing, and efficient supply chain management.

Regulatory Changes: Changes in environmental regulations, product safety standards, and trade policies can create both challenges and opportunities for The Clorox Company. Compliance with new regulations may require significant investments, while failure to comply can result in fines and reputational damage. Monitoring and adapting to the evolving regulatory landscape is essential.

Market Conditions: Fluctuations in commodity prices, changes in consumer preferences, and economic downturns can all impact The Clorox Company's financial performance. For example, rising raw material costs can squeeze profit margins, while shifts in consumer demand may require adjustments to product offerings and marketing strategies. Staying agile and responsive to market dynamics is critical for sustained success.

Operational Risks: The Clorox Company's operations are subject to various risks, including supply chain disruptions, manufacturing inefficiencies, and product recalls. Any of these events can lead to increased costs, reduced sales, and damage to the company's reputation. Implementing robust risk management practices and business continuity plans is vital for mitigating these operational risks.

Financial Risks: Financial risks include fluctuations in interest rates, currency exchange rates, and credit market conditions. These factors can impact The Clorox Company's borrowing costs, international sales, and overall financial stability. Employing hedging strategies and maintaining a strong balance sheet can help mitigate these financial risks.

Strategic Risks: Strategic risks involve decisions related to mergers and acquisitions, new product development, and market expansion. These initiatives can be complex and may not always yield the desired results. Careful planning, thorough due diligence, and effective execution are essential for managing strategic risks.

According to the Clorox Company's 2024 10-K filing, the following table outlines various risk factors and their potential impact:

These risks are discussed in detail in the company’s filings with the Securities and Exchange Commission. For instance, the 10-K filing highlights specific operational and financial risks that could affect future results. The Clorox Company actively monitors these risks and implements mitigation strategies to minimize their potential impact.

Mitigation strategies often involve diversifying supply chains, hedging against currency fluctuations, and maintaining robust insurance coverage. The Clorox Company also focuses on innovation and brand building to differentiate its products and maintain a competitive advantage.

To gain further insights into The Clorox Company's values and mission, consider exploring: Mission Statement, Vision, & Core Values of The Clorox Company (CLX).

The Clorox Company (CLX) Growth Opportunities

For The Clorox Company (CLX), several factors point toward potential future growth. These encompass product innovations, strategic market expansions, acquisitions, and partnerships.

Clorox's focus on innovation is evident in its commitment to developing new products and improving existing ones. For instance, the company has been actively expanding its offerings in the cleaning and disinfecting category, which has seen increased demand due to heightened hygiene awareness. This includes innovations in disinfecting wipes, sprays, and other related products. Clorox is also investing in sustainable products, aligning with consumer preferences for environmentally friendly options. These innovations not only cater to current market needs but also position the company to capture future demand.

Market expansion is another critical growth driver. Clorox has been strategically expanding its presence in emerging markets, where there is significant potential for growth due to increasing populations and rising disposable incomes. These expansions often involve tailoring products to local market needs and preferences. Clorox has also been focusing on expanding its e-commerce presence, which has become increasingly important as more consumers shop online. This includes strengthening its partnerships with online retailers and investing in its own e-commerce capabilities.

Acquisitions and partnerships play a crucial role in Clorox's growth strategy, enabling the company to enter new markets, expand its product portfolio, and gain access to new technologies. For example, Clorox has made strategic acquisitions in the past to strengthen its position in key categories such as vitamins, minerals, and supplements. The company also forms partnerships with other companies to leverage their expertise and resources. These collaborations can help Clorox accelerate innovation, expand its distribution network, and enter new markets more efficiently.

Future revenue growth projections and earnings estimates for Clorox depend on various factors, including the overall economic environment, consumer spending patterns, and competitive dynamics. According to Yahoo Finance, the revenue estimate for 2024 is $7.38 billion. These estimates reflect analysts' expectations for Clorox's future performance, taking into account the company's growth initiatives and market conditions.

Strategic initiatives and partnerships are also expected to drive future growth. Clorox's commitment to innovation, market expansion, and strategic acquisitions positions the company for continued success. Additionally, Clorox's focus on sustainability and e-commerce aligns with evolving consumer preferences and market trends, further enhancing its growth prospects.

Clorox possesses several competitive advantages that position it favorably for growth:

• Strong Brand Recognition: Clorox has a portfolio of well-known and trusted brands that enjoy high consumer loyalty.
• Extensive Distribution Network: Clorox has a vast distribution network that spans across multiple channels, including retail, e-commerce, and foodservice.
• Innovation Capabilities: Clorox has a strong track record of innovation, with a dedicated research and development team that develops new products and improves existing ones.
• Cost Efficiency: Clorox has implemented various cost-saving initiatives to improve its profitability and competitiveness.

These advantages enable Clorox to maintain its market leadership position, drive profitable growth, and create value for its shareholders.

Here is a table summarizing key financial data for The Clorox Company:

For more insights into The Clorox Company (CLX) investor profile, check out: Exploring The Clorox Company (CLX) Investor Profile: Who’s Buying and Why?