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Here's Why Clorox's (CLX) Strategic Efforts Appear Good
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The Clorox Company (CLX - Free Report) stock is doing well on the bourses, thanks to its robust strategic efforts. The company has been gaining from pricing and cost-saving initiatives for a while now. Its latest and integrated IGNITE strategy focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation across each area of the business.
Shares of this producer, marketer and seller of consumer products have increased 18.6% in the past six months compared with the industry’s 10.1% upside. A Growth Score of B further adds strength to this current Zacks Rank #3 (Hold) company.
Let’s Delve Deeper
Clorox’s robust pricing and cost-saving initiatives offset elevated manufacturing and logistic costs. This led to a gross margin expansion of 730 basis points (bps) year over year during the second quarter of fiscal 2024. This marked the fifth consecutive quarter of gross margin expansion on the back of pricing and cost savings, somewhat offset by adverse foreign currency fluctuations. For fiscal 2024, the gross margin is projected to expand 200 bps year over year.
The company is on track with the IGNITE strategy. This strategy encompasses the long-term financial targets of achieving net sales growth of 3-5%, EBIT margin expansion of 25-50 bps and free cash flow generation of 11-13% of sales.
Image Source: Zacks Investment Research
Management had announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. The operating model helps increase efficiency and transforms the company's operations in the areas of the supply chain, digital commerce, innovation and brand building over the long term.
The streamlined operating model is expected to enhance the company's ability to respond more quickly to changing consumer behaviors, innovate faster and increase cash flow as a result of cost savings that will be generated primarily in the areas of selling and administration, supply chain, marketing, and research and development. Once fully implemented, the company expects cost savings of approximately $75 million to $100 million annually.
Clorox had announced plans to invest $500 million in the next few years in transformative technologies and processes. The investments began in the first quarter of fiscal 2022 and include the replacement of the company's enterprise resource planning system, its transition to a cloud-based platform and the implementation of a suite of other digital technologies. Of the $500-million investment, the company will record 55% as incremental operating costs within selling and administrative expenses to be adjusted from the reported earnings per share.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank of 2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 15.8% from the year-ago reported numbers.
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Here's Why Clorox's (CLX) Strategic Efforts Appear Good
The Clorox Company (CLX - Free Report) stock is doing well on the bourses, thanks to its robust strategic efforts. The company has been gaining from pricing and cost-saving initiatives for a while now. Its latest and integrated IGNITE strategy focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation across each area of the business.
Shares of this producer, marketer and seller of consumer products have increased 18.6% in the past six months compared with the industry’s 10.1% upside. A Growth Score of B further adds strength to this current Zacks Rank #3 (Hold) company.
Let’s Delve Deeper
Clorox’s robust pricing and cost-saving initiatives offset elevated manufacturing and logistic costs. This led to a gross margin expansion of 730 basis points (bps) year over year during the second quarter of fiscal 2024. This marked the fifth consecutive quarter of gross margin expansion on the back of pricing and cost savings, somewhat offset by adverse foreign currency fluctuations. For fiscal 2024, the gross margin is projected to expand 200 bps year over year.
The company is on track with the IGNITE strategy. This strategy encompasses the long-term financial targets of achieving net sales growth of 3-5%, EBIT margin expansion of 25-50 bps and free cash flow generation of 11-13% of sales.
Image Source: Zacks Investment Research
Management had announced a streamlined operating model to create a faster, simpler company through the Reimagine Work under its IGNITE strategy. The operating model helps increase efficiency and transforms the company's operations in the areas of the supply chain, digital commerce, innovation and brand building over the long term.
The streamlined operating model is expected to enhance the company's ability to respond more quickly to changing consumer behaviors, innovate faster and increase cash flow as a result of cost savings that will be generated primarily in the areas of selling and administration, supply chain, marketing, and research and development. Once fully implemented, the company expects cost savings of approximately $75 million to $100 million annually.
Clorox had announced plans to invest $500 million in the next few years in transformative technologies and processes. The investments began in the first quarter of fiscal 2022 and include the replacement of the company's enterprise resource planning system, its transition to a cloud-based platform and the implementation of a suite of other digital technologies. Of the $500-million investment, the company will record 55% as incremental operating costs within selling and administrative expenses to be adjusted from the reported earnings per share.
Stocks to Consider
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank of 2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 15.8% from the year-ago reported numbers.