Welcome to the Stock of the Day!
Today we do a clean sweep of Clorox (CLX). Clorox just reported third-quarter earnings so we’re going to see whether this company’s financials are squeaky clean, or if there are any hidden stains we should worry about.
Clorox is one of those brands that have become so popular that the name is now interchangeable with the generic term “bleach”. And, there’s good reason for that—it is estimated that 8 in 10 U.S. households rely on Clorox for their laundry and cleaning needs!
The company also sells products in over 100 countries across five continents and employs over 8,000 worldwide. In addition to bleach, the company’s product portfolio includes mops, towels, toilet bowl cleaner, disinfecting wipes and a range of other cleaning solutions. Fun Fact: The company is celebrating its 100-year this year.
Clorox announced robust first-quarter operating results before the opening bell on Thursday. It reported higher volume for several consumer product lines (including Burt’s Bees cosmetics, charcoal and laundry products) as well as increased demand for its cleaning products designed for medical professionals.
So despite foreign currency headwinds and higher commodity costs, Clorox reported $136 million in net income on $1.36 billion in revenue. This represents top- and bottom-line growth over the year ago quarter, when Clorox posted $133 million in earnings on $1.34 billion in sales. Adjusted earnings weighed in at $1.03 per share, topping the $1.01 EPS consensus estimate by 2%.
However, the company anticipates that unfavorable foreign exchange rates and higher costs will weigh on results in FY 2014. So the company now expects sales growth in the range of 2% to 3%, down from the earlier range of 2% to 4% growth.
Additionally, Clorox forecasts EPS in the range of $4.45 to $4.60 per share, down from the earlier EPS guidance of $4.55 to $4.70. Even so, these revised ranged still fall comfortably within the Street view, so shares held steady after the announcement.
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. Over the past 12 months, CLX has remained squarely at a buy. That’s because buying pressure has held strong, so the stock currently receives a B for its Quantitative Grade. At time of writing, CLX received mediocre marks for its Fundamental Grade but my hope is that these metrics will improve once the latest earnings data is plugged into Portfolio Grader.
As of this posting, I consider CLX a B-rated Buy.