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Clorox (CLX) Surpasses the Industry in a Year: Here's How
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The Clorox Company (CLX - Free Report) has been benefiting from a solid innovation pipeline, digital transformation, pricing and cost-saving efforts. CLX has been on track with its IGNITE strategy and streamlined operating model, which aim to improve efficiency. Also, continued strength in the International segment bodes well.
Backed by these strengths, the company posted the third straight quarter of top and bottom line beat in third-quarter fiscal 2023. Sales and earnings rose year over year. Earnings benefited from pricing gains and cost savings, negated by increased advertising investments, higher selling and administrative expenses, and a rise in commodity costs. CLX has been on track with its streamlined operating model, which aims to improve efficiency.
Shares of this Zacks Rank #1 (Strong Buy) company have rallied 14.3% in the past year compared with the industry’s growth of 5.6%. The stock also compared favorably with the sector’s growth of 1.9% and the S&P 500’s 13.4% rise. The company’s long-term earnings growth rate of 12.5% and a Growth Score of B raises optimism on the stock.
The Zacks Consensus Estimate for CLX’s current financial-year sales and earnings suggests growth of 2% and 11%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for CLX?
Clorox has been on track with its streamlined operating model, which aims to improve efficiency. Gains from pricing and cost-saving initiatives were offset by elevated manufacturing and logistic costs, and higher commodity costs. It also marked the second consecutive quarter of a gross margin expansion on the back of cost pricing and high-cost savings.
The gross margin is expected to increase 250-300 bps in fiscal 2023 compared with the prior mentioned 200 bps, driven by the combined benefits of pricing actions, cost-saving and supply-chain-optimization efforts, offset by continued cost inflation.
CLX is on track with the IGNITE strategy, which focuses on the expansion of the key elements under the 2020 strategy to pace up innovation in each area of business. The IGNITE strategy encompasses the long-term financial targets of achieving net sales growth of 3-5%, an EBIT margin expansion of 25-50 bps and a free cash flow generation of 11-13% of sales.
Management announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. The operating model implemented in the first quarter of fiscal 2023 will help increase efficiencies and transform the company's operations in the areas of the supply chain, digital commerce, innovation, brand building and more, over the long term.
The implementation of this new model is likely to be completed in fiscal 2024. The company expects the operating model to generate ongoing annual savings of $75-$100 million, with benefits likely to occur from fiscal 2023. Of this, it expects $40-60 million or 30 cents per share to be recognized in fiscal 2023 under other income and expenses.
The company has been witnessing strong progress in the core International business as it continues to build on the success of the segment's Go Lean strategy. These efforts will help accelerate profitable growth for the segment. Driven by its IGNITE Strategy, which aims to improve profitability in the International business, the company expects to invest selectively in profitable platforms.
CLX has been exploring international opportunities, including the acquisition of a majority stake in its joint venture in the Kingdom of Saudi Arabia. The company believes that the acquisition will boost long-term growth in the International segment. In third-quarter fiscal 2023, organic sales for the International segment improved 1%, whereas organic sales for the segment improved 14%.
Driven by these factors, CLX envisions 2023 year-over-year net sales growth of 1-2% compared with the prior mentioned 2% decline to 1% growth. Organic sales are anticipated to increase 3-4% compared with the flat to up 3% mentioned earlier. The company expects adjusted earnings of $4.35-$4.50 per share for fiscal 2023 compared with the $4.05-$4.30 stated earlier. The guidance suggests a year-over-year increase of 6-10%.
Other Stocks to Consider
We have highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Coty (COTY - Free Report) , Procter & Gamble (PG - Free Report) and e.l.f. Beauty (ELF - Free Report) .
Coty currently sports a Zacks Rank #1. COTY has a trailing four-quarter earnings surprise of 145%, on average. It has a long-term earnings growth rate of 15.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coty’s current fiscal-year sales and earnings suggests improvements of 3.1% and 89.3%, respectively, from the year-ago reported numbers. The consensus mark for COTY’s earnings per share has been unchanged in the past 30 days.
Procter & Gamble currently carries a Zacks Rank #2 (Buy). PG has a trailing four-quarter earnings surprise of 1.02%, on average. It has a long-term earnings growth rate of 6.1%.
The Zacks Consensus Estimate for Procter & Gamble’s current financial-year sales and earnings per share suggests growth of 1.5% and 0.9%, respectively, from the year-ago reported numbers. The consensus mark for PG’s earnings per share has been unchanged in the past 30 days.
e.l.f. Beauty currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 20%. ELF has a trailing four-quarter earnings surprise of 103.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and earnings suggests growth of 25.6% and 9.6%, respectively, from the year-ago reported numbers. The consensus mark for ELF’s earnings per share has moved up 2.2% in the past 30 days.
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Clorox (CLX) Surpasses the Industry in a Year: Here's How
The Clorox Company (CLX - Free Report) has been benefiting from a solid innovation pipeline, digital transformation, pricing and cost-saving efforts. CLX has been on track with its IGNITE strategy and streamlined operating model, which aim to improve efficiency. Also, continued strength in the International segment bodes well.
Backed by these strengths, the company posted the third straight quarter of top and bottom line beat in third-quarter fiscal 2023. Sales and earnings rose year over year. Earnings benefited from pricing gains and cost savings, negated by increased advertising investments, higher selling and administrative expenses, and a rise in commodity costs. CLX has been on track with its streamlined operating model, which aims to improve efficiency.
Shares of this Zacks Rank #1 (Strong Buy) company have rallied 14.3% in the past year compared with the industry’s growth of 5.6%. The stock also compared favorably with the sector’s growth of 1.9% and the S&P 500’s 13.4% rise. The company’s long-term earnings growth rate of 12.5% and a Growth Score of B raises optimism on the stock.
The Zacks Consensus Estimate for CLX’s current financial-year sales and earnings suggests growth of 2% and 11%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for CLX?
Clorox has been on track with its streamlined operating model, which aims to improve efficiency. Gains from pricing and cost-saving initiatives were offset by elevated manufacturing and logistic costs, and higher commodity costs. It also marked the second consecutive quarter of a gross margin expansion on the back of cost pricing and high-cost savings.
The gross margin is expected to increase 250-300 bps in fiscal 2023 compared with the prior mentioned 200 bps, driven by the combined benefits of pricing actions, cost-saving and supply-chain-optimization efforts, offset by continued cost inflation.
CLX is on track with the IGNITE strategy, which focuses on the expansion of the key elements under the 2020 strategy to pace up innovation in each area of business. The IGNITE strategy encompasses the long-term financial targets of achieving net sales growth of 3-5%, an EBIT margin expansion of 25-50 bps and a free cash flow generation of 11-13% of sales.
Management announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. The operating model implemented in the first quarter of fiscal 2023 will help increase efficiencies and transform the company's operations in the areas of the supply chain, digital commerce, innovation, brand building and more, over the long term.
The implementation of this new model is likely to be completed in fiscal 2024. The company expects the operating model to generate ongoing annual savings of $75-$100 million, with benefits likely to occur from fiscal 2023. Of this, it expects $40-60 million or 30 cents per share to be recognized in fiscal 2023 under other income and expenses.
The company has been witnessing strong progress in the core International business as it continues to build on the success of the segment's Go Lean strategy. These efforts will help accelerate profitable growth for the segment. Driven by its IGNITE Strategy, which aims to improve profitability in the International business, the company expects to invest selectively in profitable platforms.
CLX has been exploring international opportunities, including the acquisition of a majority stake in its joint venture in the Kingdom of Saudi Arabia. The company believes that the acquisition will boost long-term growth in the International segment. In third-quarter fiscal 2023, organic sales for the International segment improved 1%, whereas organic sales for the segment improved 14%.
Driven by these factors, CLX envisions 2023 year-over-year net sales growth of 1-2% compared with the prior mentioned 2% decline to 1% growth. Organic sales are anticipated to increase 3-4% compared with the flat to up 3% mentioned earlier. The company expects adjusted earnings of $4.35-$4.50 per share for fiscal 2023 compared with the $4.05-$4.30 stated earlier. The guidance suggests a year-over-year increase of 6-10%.
Other Stocks to Consider
We have highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Coty (COTY - Free Report) , Procter & Gamble (PG - Free Report) and e.l.f. Beauty (ELF - Free Report) .
Coty currently sports a Zacks Rank #1. COTY has a trailing four-quarter earnings surprise of 145%, on average. It has a long-term earnings growth rate of 15.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coty’s current fiscal-year sales and earnings suggests improvements of 3.1% and 89.3%, respectively, from the year-ago reported numbers. The consensus mark for COTY’s earnings per share has been unchanged in the past 30 days.
Procter & Gamble currently carries a Zacks Rank #2 (Buy). PG has a trailing four-quarter earnings surprise of 1.02%, on average. It has a long-term earnings growth rate of 6.1%.
The Zacks Consensus Estimate for Procter & Gamble’s current financial-year sales and earnings per share suggests growth of 1.5% and 0.9%, respectively, from the year-ago reported numbers. The consensus mark for PG’s earnings per share has been unchanged in the past 30 days.
e.l.f. Beauty currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 20%. ELF has a trailing four-quarter earnings surprise of 103.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and earnings suggests growth of 25.6% and 9.6%, respectively, from the year-ago reported numbers. The consensus mark for ELF’s earnings per share has moved up 2.2% in the past 30 days.