CLX - Clorox: Improving Outlook Good Dividend Yield And Discounted Valuation

2024-06-28 15:38:54 ET

Summary

• Clorox is poised for revenue and margin growth recovery after the cyberattack last August, with market share nearly regained and focus shifting to product innovation and advertising.
• The company benefits from operating leverage, improved product mix, and moderating input costs, supporting margin expansion and a positive growth outlook.
• Valued below historical averages with a 3.51% dividend yield, Clorox presents a buying opportunity given its strong growth potential and anticipated upward revision in estimates.

Investment Thesis

The Clorox Company ( CLX ) should deliver good revenue and margin growth in the coming years. A cyberattack in Q1 FY24 disrupted the company’s operations and distributions over the last three quarters. However, the company has done a good job in terms of regaining ~90% of its lost market share and also expects to fully recover the distribution losses in Q4 FY24. With distractions from these short-term issues largely behind, the company should be able to refocus on revenue growth management, product innovation, and bolt-on M&A, which bodes well for its future growth. ...

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