Americans Stick to Pandemic Cleaning Routines, Boosting Clorox's Revenue

Clorox, a leading provider of household cleaning products, continues to benefit from Americans' unwavering commitment to pandemic cleaning practices. However, despite the positive financial results, Wall Street analysts are maintaining a cautious stance towards the company's stock.

In their recent report, Clorox revealed adjusted earnings of $1.67 per share for the fourth fiscal quarter, surpassing the expectations of FactSet analysts who predicted $1.17 per share. The company also achieved a remarkable record revenue of $2.02 billion for the quarter, marking a substantial 12% growth compared to the projected $1.86 billion.

This outstanding revenue growth in the fourth quarter can be attributed to the strong consumer demand for various product categories. Clorox experienced a 14% increase in net revenue across key segments: Lifestyle, Household, and Health and Wellness. These segments encompass a wide range of popular products including water filters, cat litter, and the ever-popular Clorox Disinfecting Wipes.

The market responded positively to this news, with Clorox's stock (ticker: CLX) surging by 10% to reach $167.91 during Thursday's trading session. This rise represents the largest percentage increase since March 2020 when the stock saw a 14% boost.

Moreover, Clorox's fiscal-year revenue has exceeded previous years, even amidst the ongoing pandemic. This year alone, the company achieved a record-breaking revenue of $7.4 billion, surpassing the figures of $6.7 billion and $7.3 billion in fiscal years 2020 and 2021 respectively.

Clorox's impressive financial performance demonstrates both the resilience of the brand and the enduring commitment of Americans to prioritize cleanliness and hygiene during these challenging times.

Management's Positive Outlook

Management at the company has provided a positive outlook for the future. They anticipate adjusted earnings of between $5.60 and $5.90 per share for fiscal 2024. The midpoint of this range, $5.75 per share, is higher than the FactSet consensus estimates of $5.62.

Mixed Analyst Views

Despite the positive outlook, Wells Fargo analyst Chris Carey maintains a Sell rating on the company's shares. While acknowledging the company's strong position and achievable outlook, Carey believes the stock is currently overpriced with limited catalysts for future growth.

UBS analyst Peter Grom also maintains a Sell rating on the stock, citing its valuation as the reason. Although the company has surpassed expectations, Grom believes that its recovery is already priced into the stock.

Analyst Ratings

According to FactSet, 55% of analysts have a Sell or equivalent rating on the company's shares, while 40% have a Hold rating and only 10% rate the shares as a Buy.