Clorox Co (CLX, Financial) recently reported a daily loss of 1.93% and a three-month decline of 8.1%, with an Earnings Per Share (EPS) of 1.93. This analysis seeks to determine whether Clorox Co is currently fairly valued in the market, considering these figures and other financial metrics.
Company Overview
Clorox Co, with a history spanning over a century, has become a significant player in the consumer products sector. Its portfolio includes well-known brands such as Liquid-Plumr, Pine-Sol, and Burt's Bees. Predominantly, Clorox generates about 85% of its revenue from the United States. Currently, the stock's price stands at $138.55, while the GF Value estimates its fair value at $150.37, suggesting that the stock might be fairly valued.
Understanding GF Value
The GF Value is a unique valuation metric that considers historical trading multiples, a GuruFocus adjustment factor based on past performance, and estimated future business performance. If Clorox Co's stock price significantly deviates from this GF Value line, it might indicate that the stock is either overvalued or undervalued, affecting potential future returns. Presently, Clorox Co's stock price aligns closely with the GF Value, suggesting a fair valuation.
Financial Strength and Stability
Investing in companies with robust financial health is crucial. Clorox Co's cash-to-debt ratio is 0.07, indicating some concerns as it is lower than 84.85% of its peers in the Consumer Packaged Goods industry. The company's overall financial strength is rated 5 out of 10 by GuruFocus, suggesting moderate financial stability.
Profitability and Growth Prospects
Clorox Co has consistently demonstrated profitability, with a strong operating margin of 11.93%, which is higher than 78.56% of its competitors. However, its growth metrics raise some concerns. The company's 3-year average revenue growth rate and EBITDA growth rate are lower than many of its industry peers, potentially impacting its long-term value creation.
Return on Invested Capital vs. Cost of Capital
A key measure of profitability is comparing the Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC). Clorox Co's ROIC is 13.61, surpassing its WACC of 7.86, which indicates effective management and value creation for shareholders.
Conclusion
Based on the current analysis, Clorox Co (CLX, Financial) appears to be fairly valued. The company maintains a solid profitability profile, but its growth and financial strength present some risks. For a deeper dive into Clorox Co's financials and to explore other high-quality investment opportunities, visit Clorox Co's 30-Year Financials and the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
