Clorox Co. (CLX, Financial) has been performing remarkably well, providing strong quarterly performances and increasing dividends every year since 1977. This consistent stock has good momentum and will grow considerably with time.
The California-based company sells its products through mass retail outlets, e-commerce channels, distributors, and medical supply providers. Clorox operates through four segments: Cleaning, which consists of laundry, home care and professional products; Household, which consists of bags and wraps, charcoal and cat litter; Lifestyle, such as water filtration products and natural personal care; and International, which consists of products sold outside the U.S.
Strong Quarter Results
The company reported sales declined by more than 2% and diluted earnings per share was $1.30. On a currency-neutral basis, sales grew half a percentage point. For the full fiscal year, the company reported a sales decrease of slightly more than half a percentage point and diluted EPS was $4.26.
In the fourth quarter, Clorox delivered earnings from continuing operations of $170 million, or $1.30 diluted EPS.
Current quarter results include higher manufacturing and logistics costs and increased commodity costs. Additionally, the company invested $20 million in incremental demand-building initiatives versus the year-ago quarter, impacting diluted EPS by 10 cents.
In the fourth quarter, the company's sales decreased by 2%, primarily due to the impact of unfavorable foreign currency exchange rates and higher trade promotion spending, partially offset by the benefit of price increases.
The company's current quarter gross margin was 42.3%, reflecting a decrease of 170 basis points versus the year-ago quarter.
Segment Performance:
Cleaning
(Laundry, Home Care and Professional Products)
- Flat volume
- 1% sales decrease
- 2% pretax earnings increase
Household
(Bags, Wraps, Charcoal and Cat Litter)
- 2% volume decrease
- 2% sales decrease
- 2% pretax earnings increase
Lifestyle
(Dressings and Sauces, Water Filtration and Natural Personal Care)
- 2% volume increase
- 2% sales increase
- 11% pretax earnings increase
International
(All countries outside of the U.S.)
- 1% volume increase
- 8% sales decrease
- 70% pretax earnings decrease
Dividend
The company recently declared a quarterly dividend of 77 cents per share on the company's common stock, payable on Nov. 13 Â to stockholders on record as of Oct. 28.
Projections for 2015
The company expects the following:
- Sales about flat (1% to 3% increase, currency neutral)
- 25 basis points to 50 basis points of EBIT margin expansion
- $4.35 to $4.50 diluted EPS range
Strong Attributes of the Quarter
- The company is investing in incremental demand-building programs to reinforce the value proposition of its brands
- Profitable growth in market shares
Expanding Partnership with Google
Clorox is deepening its relationship with Google (GOOG, Financial) to advance Clorox's marketing innovation, enhance consumer insights and develop more robust digital measurement.
"Reaching today's always-connected consumers with the right message at the right time has never been more important," said Clorox CEO Benno Dorer. "Google's leadership in digital technologies and advertising platforms in display, mobile, search and video will fuel our ability to respond to consumers in a faster, more personalized way from the point of product consideration through the purchase."
This step supports the central aspect of Clorox's 2020 Strategy, which is aiming to drive profitable growth. By stepping up its investment behind Google platforms, Clorox is making Google its largest and most efficient digital media partner. As consumers have turned to digital media across different devices, digital marketing communications have been an increasing focus of the company. Clorox and Google's teams will work together to refine Clorox's targeting, measurement and activation capabilities, including the use of Google's automation tools that allow Clorox to purchase media programmatically in a real-time bidding environment.
(Source: Company’s Website)
Why Clorox?
The multinational manufacturer and marketer of consumer and professional products has a solid pipeline of innovation and cost savings. The company’s higher FY 2015 outlook reflects a balanced view of macro-economic factors.Â
On a concluding note
Overall, Clorox is a solid company with big share brands in the mid-sized categories, and over 80% of its portfolio has a No. 1 or No. 2 share in the market. It has a strong position in categories with private label exposure, and its approach to innovation is also broad-based. Clorox has repurchased nearly 40% of shares outstanding over the last 10 years. The company has enough opportunity to grow in the future with its innovative products, strong sales and a healthy dividend track record. Further, Clorox believes that the forex headwinds are likely to lessen over the long term, which will help to increase its growth.Â
