Clorox Co (NYSE:CLX) faces near-term issues as the company brings in a new CFO and releases its earnings report on Feb. 2. With popular products, steady profits, and a rising dividend, CLX remains a solid company.

However, the increasing price-to-earnings (PE) ratio could raise doubts among buyers. Given that CLX is a slow-growth company with a high multiple, investors should consider bleaching this stock out of their portfolios.

Likely Earnings Beat and Continued Dividend Increases

Contrary to popular belief, the Oakland, California-based consumer products firm produces more than its well-known bleach. Pine-Sol, Liquid Plumr and Kingsford Charcoal are other products produced by CLX. Consumers consider most of the company’s products necessary regardless of the economic climate. Hence, Clorox has steady revenues in good times and bad.

The company surprised to the upside in three of the last four quarters, including in the December quarter last year. Given its history of reporting, investors should also expect a surprise on the upside in this upcoming report. How that affects the stock remains unknown.

If one is going to buy CLX stock, the best reason to invest remains its dividend. Since the streak of dividend increases dates back to 1976, the company has earned the “dividend aristocrat” title.

Moreover, over the last 20 years, the average rate of dividend increases stands at about 8.3%. The company pays an annual dividend of $3.36 per share, a yield of just over 2.25%. This figure remains well above the average S&P 500 yield of 1.73%.

CLX Faces High Multiples and Slow Growth

While the dividend remains impressive, my concern with CLX stock lies in its valuation. At 26.5 times earnings, the PE ratio exceeds the S&P 500 average. This multiple also seems high given that revenue has only grown by an average 1.8% over the last five years.

Future earnings estimates indicate annual EPS will continue growing in the mid- to high-single digits. However, for a slow-growth company such as CLX, a 26.5 PE ratio seems high.

Despite the high multiple, CLX outperforms some of its peers. Procter & Gamble Co (NYSE:PG) pays a dividend with a higher yield. Still, it struggles with revenue declines averaging 4.5% per year. Colgate-Palmolive Company (NYSE:CL) trades at a 30 PE as it also faces a string of declining revenues.

The company offering the most favorable valuations to buyers is Kimberly Clark Corp (NYSE:KMB). KMB also struggles with declining revenue. However, its PE stands at about 20, and it pays a dividend yielding over 3.3%. Like CLX stock, KMB has increased dividends every year for decades.

Clorox also faces some minor uncertainty as a new CFO takes the helm. With the retirement of Stephen Robb, Kevin Jacobsen will become the new CFO. Like Mr. Robb before him, the company promoted Jacobsen from within its ranks. Since Jacobsen previously served as the VP of financial planning and analysis, any radical culture change in the company appears unlikely.

Final Thoughts on CLX Stock

Despite what lies in the upcoming earnings report, investors might earn higher returns in a different consumer products company. The ever-increasing dividend remains solid. However, the stock price has moved up to levels that give Clorox stock a high multiple for a slow-growth business.

Although the company remains solid, investors likely should buy Clorox bleach and sell Clorox stock.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.