- Price
- $89.77
- Fair value
- $154.00
- Discount
- 41.7%
- Uncertainty
- Medium
- LSEG rating
- 3.10
- Moat
- Wide
- Next earnings
- 2026-11-03
- Next earnings is estimate
- No
- Company name
- The Clorox Company
- Sector
- Consumer staples (household & personal products)
- About
- Clorox makes household and personal care products that people buy every week. Its brands include Clorox bleach and wipes, Pine-Sol cleaner, Glad trash bags, Brita water filters, Burt's Bees skin care, and Kingsford charcoal. Clorox sells these products to large retailers such as Walmart and Target, who then sell them to consumers. Most Clorox brands hold the number one or number two share position in their category.
- Thesis
- Clorox just finished a five-year, roughly $580 million project to replace its 20-year-old SAP system. The final cutover caused a retailer inventory whipsaw, so fiscal 2026 organic sales fell about 8%, and gross margin fell to 42.3%. Private-label pressure is real, but concentrated: Health and Wellness, which includes bleach, wipes, and now Purell, still earns a 25.1% margin and makes 57% of segment profit from just 40% of sales, while Household, hit hardest by private label, earns only a 10.7% margin. Clorox funded its $2.25 billion purchase of GOJO mostly with debt, pushing leverage to about 4.4 times EBITDA and triggering a credit rating cut to BBB in February 2026, though management targets a return to about 2.5 times by the end of calendar 2027. Clorox's own options market prices implied volatility well above what a calm staples stock normally trades at, showing investors already expect real uncertainty around the leverage, the open CEO search, and whether the business has actually stabilized. If the FY2027 rebound plays out and a new CEO resolves the leadership question, some of that priced-in fear could prove overdone.
- Risks
- Debt taken on for the GOJO and Glad joint-venture buyouts pushed leverage to about 4.4 times EBITDA, above the 3.6 times expected when the GOJO deal was signed, because EBITDA itself has fallen. S&P has already cut Clorox's credit rating once. Management's plan to return to about 2.5 times leverage by the end of calendar 2027 depends on earnings actually recovering.
CEO Linda Rendle announced in May 2026 that she will step down for health reasons once the board finds a successor. This leadership transition adds execution risk at the same time Clorox is integrating GOJO and stabilizing its new SAP system.
Private-label pressure is not spread evenly across Clorox's business. The Household segment, which includes trash bags and cat litter, earns only a 10.7% margin and 16% of segment profit despite being Clorox's second-largest segment by sales. Further private-label gains here would hurt profit more than in Clorox's stronger categories.
A California judge let most of Clorox's $380 million lawsuit against Cognizant proceed in March 2026, but no trial date has been set. This is realistic multi-year litigation, not a near-term payout, and Clorox has recovered only a fraction of its claimed damages from insurance so far.
The options market already prices unusually high volatility into Clorox shares, well above a typical staples stock. This reflects real uncertainty about leverage, the open CEO search, and whether the FY2027 rebound holds up, with the next test being Clorox's Q1 fiscal 2027 earnings report, expected in early November 2026.
- Recent events
- 2026-08-03: Clorox reported full fiscal-year 2026 results. Net sales fell 5% to $6.72 billion, organic sales fell 8%, and adjusted earnings per share fell 28% to $5.53. The company guided to 3-4.5% organic sales growth for fiscal 2027.
2026-05-28: CEO Linda Rendle asked the board to start a search for her successor, saying she will step down for health reasons after treatment for early-stage breast cancer. She will remain CEO until a successor is named.
2026-04-01: Clorox completed its $2.25 billion acquisition of GOJO Industries, maker of Purell, funded mostly with new debt.
2026-03-25: A California judge trimmed Clorox's lawsuit against Cognizant, dismissing an intentional misrepresentation claim but letting the breach of contract and gross negligence claims proceed. No trial date has been set.
2026-03-02: Clorox paid $476 million in cash to buy Procter & Gamble's 20% stake in the Glad trash bag joint venture, taking full ownership of the Glad brand.
2026-02-18: S&P Global Ratings downgraded Clorox to BBB from BBB+, citing the leverage added by the debt-funded GOJO acquisition.
2025-07-22: Clorox sued its IT services contractor, Cognizant, for $380 million in California state court, alleging Cognizant's help desk handed network passwords to a caller posing as an employee during the August 2023 cyberattack.