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Factors Likely to Influence Clorox (CLX) in Q1 Earnings

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The Clorox Company (CLX - Free Report) is expected to report a year-over-year decline in its top and bottom lines when it releases first-quarter fiscal 2022 results on Nov 1, after market close.

The Zacks Consensus Estimate for earnings in the fiscal first quarter is pegged at $1.01, which suggests a plunge of more than 68% from the prior-year quarter’s reported figure. The consensus estimate for quarterly earnings has been unchanged in the past 30 days. The consensus mark for quarterly revenues is pegged at $1.7 billion, implying a decline of 11.1% from the prior-year quarter’s reported number.

In the last reported quarter, the consumer product manufacturer delivered a negative earnings surprise of 26.4%. However, it has a trailing four-quarter earnings surprise of 9.7%, on average.

Key Factors to Note

Clorox has been witnessing a sluggish top-line performance mainly due to reduced shipments and an unfavorable price mix. On its last reported quarter’s earnings call, management expected sales to decline in low-double digits in first-quarter fiscal 2022.

Higher manufacturing and logistics costs across all categories, and increased commodity costs are expected to have been concerning. The aforesaid expenses coupled with higher advertising and sales promotion investments are anticipated to have hurt the bottom line in the fiscal first quarter. The higher spending mainly relates to increased brand investments to support its innovation pipeline and customer engagement efforts. The company expects cost headwinds to be more pronounced in the first quarter of fiscal 2022, with higher manufacturing fixed-cost absorption.

However, Clorox’s fiscal first-quarter performance is expected to have witnessed continued gains from the execution of the IGNITE strategy, which mainly focuses on the expansion of the key elements to pace up innovation in every area of its business.

The company has been on track with its cost-saving and productivity initiatives. Backed by the IGNITE strategy, Clorox has been aiming for higher cost savings annually by emphasizing technology and integrated design. Strength in the core International business on the success of the segment's Go Lean strategy is also expected to have aided the company.

The Clorox Company Price and EPS Surprise

 

The Clorox Company Price and EPS Surprise

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

What the Zacks Model Predicts

Our proven model does not conclusively predict an earnings beat for Clorox this season. 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 currently has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of +4.46%.

Stocks With 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:

Campbell Soup Company (CPB - Free Report) presently has an Earnings ESP of +4.07% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods (TSN - Free Report) currently has an Earnings ESP of +19.13% and a Zacks Rank #3.

Hormel Foods Corporation (HRL - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank #3 at present.

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