Earnings Review: The Clorox Company Q4 2017
- Clorox beat on earnings and reported an in-line revenue number.
- The company reported solid segment volume growth and expanded its gross margins.
- Management is confident in executing its 2020 strategy and gave a solid fiscal 2018 outlook
The Clorox Company (CLX) closed its fiscal 2017 with earnings and an in-line revenue number. The consumer products company reported earnings of $1.53 versus analyst expectations of $1.49/share. Clorox reported revenue of 1.65 billion which was in line with expectations. Clorox’s earnings were smack in line with my expectations and my estimates got me a number 1 ranking out of 36 analysts who put in estimates on Estimize. I estimated that the company would have earnings of $1.52/share and revenue of $1.65 billion.
Clorox grew its revenue by 3.1% (4% on a currency-neutral basis) and all of the company’s revenue reported growth. Clorox’s international business grew its revenue by 5%, showing evidence that the global economic recovery still has legs to run. In terms of volume growth, Clorox seems to have found a balance of a good portfolio of products. The company reported volume growth of 3% quarter and 6% for the full fiscal year which is solid for a consumer goods company. The company also expanded its gross margins showing that management is operating this company well and maintaining costs. Clorox’s gross margins went up by 30 basis points to 45.7%, probably one of the highest margins in the industry.
Looking at the fiscal 2018 outlook, management expects that the company the following:
- 2% to 4% of sales growth
- $5.52- $5.72/share in earnings (EPS growth of 3–7%)
Management is on track and confident that they will achieve their 2020 strategy. Clorox’s e-commerce strategy has really strengthened the company’s market share (even stealing market share from competitors). Clorox spends approximately 45% of its marketing dollars on Facebook, Amazon, and Google. This old consumer goods company has really embraced technology and the CEO, Benno Dorer is doing a great job.
Grade: This was an A quarter from Clorox. In terms of consumer good stocks, Clorox is one of my favorite names and although it’s pricey it has the growth in revenues and a good dividend yield. If the stock ever goes below $125 I am a buyer.
Disclosure: Cresco Investments is long Clorox (CLX)
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This article is intended for information, engagement & entertainment purposes only, and is not to be construed as investment advice or direction. Investors are strongly encouraged to perform due diligence and/or consult with their financial advisor.
