CLX — The Clorox Company

The market is cautious but not hostile: 21 holds, 3 buys, and 5 sells, with recent post-earnings targets from UBS ($105), Wells Fargo ($102), and Evercore ($99) bracketing the current price. The Aug 3, 2026 print showed Q4 adjusted EPS down 42% and FY27 guidance of $5.70-$6.00 driven ~9.5 points by GOJO, so investors are unwilling to re-rate the stock until the Clorox Purell integration actually shows up in earnings.

Revenue tells a clear FY26 trough story: YoY growth was -18.9% in Q1 FY26 (Sep-2025), roughly flat in Q2/Q3, and -2% in Q4 FY26 (Jun-2026), with the Q4 sequential jump to $1.948B reflecting seasonal strength plus ~10 points of GOJO contribution. Margins look distorted by a one-time item: Q4 FY26 operating income of $1.022B exceeds gross profit of $804M, which is impossible in a normal quarter and inflates the TTM operating margin to 24.7%; the normalized run-rate is closer to 12-14%. FY26 diluted EPS of $4.81 versus $6.51 in FY25 confirms the trough, and the FY27 guide (revenue +13-14%, EPS $5.70-$6.00) implies a sharp recovery that is largely acquisition-driven, not organic (organic ~3.5-4.5%).

At $103.63, CLX trades at 21.5x TTM EPS of $4.82 (depressed) and roughly 17.5-18x FY27 guidance of $5.70-$6.00 - fair-to-slightly-rich for a business with ~4% organic growth and a stretched balance sheet. P/S of 1.87x sits below the 5-year average of 2.25x, and the 4.7% dividend yield is near the high end of its history, but the $5.00 dividend exceeds TTM EPS (100%+ payout), so the yield only holds if FY27 earnings materialize. P/B of 140x is meaningless given just $90M of book equity; the more relevant lens is forward earnings, on which the stock is not cheap.

The price is essentially pricing in a clean GOJO integration: ~17.5x FY27 mid-point guidance leaves no margin for error if the acquisition disappoints or inflation runs hotter than the guided $200M+ headwind. If management delivers the $5.70-$6.00, the stock is near fair value with a good dividend; if organic growth stays weak or the balance sheet forces a dividend/re-capitalization rethink, the stock could retest the low-$90s. This is a 'show-me' situation - the first real checkpoint is Q1 FY27 earnings in early November 2026.

As of 2026-08-27, RSI(14) was 50.8 - dead neutral - and price was -1.36% below the 20-day SMA, +4.03% above the 50-day SMA, and +0.22% above the 200-day SMA. That reads as a range-bound basing pattern between roughly $95 and $108 with no overbought/oversold signal and no confirmed trend; technicals offer no timing edge, and patience suggests accumulating toward the $95-$100 zone (near the 50-day) rather than chasing above $105.

• Persistent input-cost inflation: management embeds over $200M of commodity/logistics/manufacturing cost pressure in FY27, capping gross margin near 42%.
• Value-seeking consumer: soft volumes in discretionary segments (grilling, cat litter) and private-label competition keep organic growth around 3.5-4.5%.
• Higher-for-longer rates and a stretched balance sheet: GOJO funding pushed long-term debt to $3.98B versus just $90M of equity, raising interest expense and limiting financial flexibility.
• Defensive/income rotation: with a 4.7% yield and a 0.54 beta, CLX is a candidate for rate-driven rotation into consumer staples if yields fall.
• Health & hygiene structural tailwind: the Clorox Purell portfolio now exceeds 50% of net sales, a durable post-COVID mix shift toward faster-growing healthcare-linked hygiene products.

• Q1 FY27 earnings (expected ~Nov 2, 2026): first hard evidence of GOJO/Purell revenue and margin contribution; early consensus is ~$1.09 EPS.
• GOJO integration milestones: confirming or raising FY27 guidance of $5.70-$6.00 and proving the >50% health/hygiene mix improves margins.
• CEO succession: chair/CEO Linda Rendle is managing a transition pipeline; new leadership could prompt portfolio review, divestitures, or a reset of capital-return policy.
• Commodity/logistics disinflation: if the >$200M FY27 inflation assumption proves too conservative, gross margin beats become likely.

• Balance sheet stress: $3.98B long-term debt vs. $90M equity, a 0.66 current ratio, and a $5.00 dividend that exceeds TTM EPS of $4.82 - a dividend cut or dilutive equity raise would be a major shock.
• GOJO/Purell integration under-delivers: ~9.5 points of the 13-14% FY27 revenue growth is inorganic; any channel disruption or margin shortfall hits the stock hard.
• Organic growth stays weak: continued negative volumes from ERP shipment distortions and consumer value-seeking would make the 'recovery' purely acquisition accounting.
• Competitive/promotional pressure in cleaning and household categories could erode the 42% gross margin.
• CEO transition introduces strategy uncertainty even if day-to-day execution remains solid.

Clorox is a high-quality staple franchise (20.4% ROIC, negative accruals ratio of -2.14%, dominant brands) emerging from a genuine trough year caused by ERP disruption, the GOJO acquisition, and cost inflation - but the current $103.63 price already assumes the turnaround goes smoothly. The 4.7% yield cushions downside and the low 0.54 beta makes it a reasonable income holding, yet with only ~4% organic growth and a leveraged balance sheet, the risk/reward is balanced rather than compelling. As of 2026-08-27, this is a Neutral/Hold: worth owning for income, but not a standout buy until FY27 numbers confirm the integration thesis.

Calculated as 16.8x FY27 adjusted EPS midpoint of $5.85 (guidance $5.70-$6.00; analyst average $5.81), with the multiple reflecting CLX's low 0.54 beta and 4.7% dividend yield, discounted for weak ~4% organic growth, the stretched balance sheet ($3.98B debt vs. $90M equity), and GOJO integration risk. This is modestly below the $103.63 market price and essentially in line with the $100.11 analyst consensus target.