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Things You Should Know About Clorox (CLX) Ahead of Q1 Earnings

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The Clorox Company (CLX - Free Report) is slated to report first-quarter fiscal 2021 results on Nov 2, before market open. In the last reported quarter, this Oakland, CA-based manufacturer and marketer of consumer products delivered an earnings surprise of 20.5%. Moreover, it delivered an earnings surprise of 11.3%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at $2.34 per share, suggesting 47.2% growth from the year-ago quarter’s reported figure. The consensus mark has moved down by 2.1% in the past 30 days. For fiscal first-quarter revenues, the consensus mark is pegged at $1.76 billion, suggesting 16.6% growth from the prior-year quarter’s reported figure.

Factors to Note

Clorox has been gaining from increased demand for disinfecting and cleaning products since the onset of the COVID-19 pandemic and broad-based growth at all segments. In the last reported quarter’s earnings call, management predicted continued gains from persistent strong demand globally for cleaning and disinfecting products, aggressive investments in its global portfolio, and minimal disruptions in its extended supply chain and other operations.

The company’s top-line results for the fiscal first quarter are expected to reflect continued gains from volume growth and higher organic sales. Further, gains from its cost-containment efforts are likely to have aided margins and the bottom line.

The Clorox Company Price and EPS Surprise


The Clorox Company Price and EPS Surprise

The Clorox Company price-eps-surprise | The Clorox Company Quote

Further, it has been progressing well with its IGNITE Strategy, which focuses on maximizing opportunities in the core international business and increasing the demand for more sustainable products such as new Clorox compostable cleaning wipes. Backed by the IGNITE strategy, the company has been aiming at higher cost savings annually by emphasizing more on technology and integrated designs. These cost savings have been aiding its earnings performance in the past few quarters, which are expected to have continued in the fiscal first quarter.

However, Clorox has been reeling under elevated costs for manufacturing and logistics as well as higher incentive compensation. These escalated costs have been hurting the bottom line for a while. Moreover, increased advertising and sales promotion investments have been headwinds.

In the last reported quarter’s earnings call, management predicted continued higher brand investments to address the unprecedented demand for its products. Also, it has been investing in expanding its production capacity to resonate well with the ongoing elevated demand. These investments are likely to have pressured margins in the fiscal first quarter. Apart from these, foreign currency headwinds have been weighing on the company’s performance.

Zacks Model

Our proven model does not predict an earnings beat for Clorox this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Clorox has a Zacks Rank #4 (Sell) and an Earnings ESP of -5.77%.

3 Stocks With a Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Purple Innovation, Inc. (PRPL - Free Report) presently has an Earnings ESP of +5.82% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nu Skin Enterprises, Inc. (NUS - Free Report) has an Earnings ESP of +3.54% and a Zacks Rank #2 at present.

The Estee Lauder Companies Inc. (EL - Free Report) currently has an Earnings ESP of +4.23% and a Zacks Rank #3.

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