In the summer of 2001 I started my career as a financial advisor during the tech bubble busting and right before 911. The massive losses by investors caused me to look for investments that were more safe and would weather the storm. One of those stocks I have been watching is Clorox (CLX).
It doesn’t take a genius to see that Covid-19 has created an all time high for bleach and other cleaning supplies. I have noticed that they are currently available, but I suspect that the demand in the coming months will be higher than last year.
As a result of the historic demand, Clorox Stock CLX is up 45% compared to the S&P 500. However, CLX recently dropped from a high of $239.87 to $194.91 per share. Investors are asking, “Is Clorox stock (CLX) a buy.” The short answer is yes, I believe Clorox stock is a good buy for investors that are looking for consumer defensive dividend stock because of the coronavirus and its excellent dividend history. In addition the average target price of 8 analysts is $227.75 which makes the current price of $206.87 a buy.
CLX stock has grown dramatically this year for a consumer stock and maturity level. A stock dip should be expected.
As with all investments, financial advisors and investors should do their own research. Clorox stock may be great buy for some, but a pass for other investors. Some of the factors when considering to buy stocks is your risk, the fundamentals, business model and technicals.
Contents
Who is Clorox?
With a history dating back more than 100 years, The Clorox Company, based in Oakland, California, sells a variety of consumer staples products, including cleaning supplies, laundry care, trash bags, cat litter, charcoal, food dressings, water-filtration products, and natural personal-care products. Beyond its namesake brand, the firm’s portfolio includes Liquid-Plumr, Pine-Sol, SOS, Tilex, Kingsford, Fresh Step, Glad, Hidden Valley, KC Masterpiece, Brita, and Burt’s Bees.
The company’s business model is easily understood by most investors. It is also very American. Just shy of 85% of Clorox’s sales stem from its home turf. Meaning good or bad, the company does not have tremendous international exposure.
Clorox Dividends
| Stock | Industry | S&P 500 | |
|---|---|---|---|
| Dividend Yield | 2.1% | 2.0% | 1.5% |
| Payout Ratio | 47.0% | 63.5% | 50.5% |
| TTM Yield | 2.1% | – | 1.6% |
| Dividend Per Share | $4.44 | $2.20 | $53.64 |
| Div. 1Y Chg (%) | 4.7% | 12.6% | -3.1% |
| Dividend 3‑Year Avg (%) | 9.7% | 8.8% | 2.8% |
| Dividend 5‑Year Avg (%) | 7.6% | 7.5% | 5.4% |
Financial Health
| Current Ratio | 1.4 |
| Quick Ratio | 1.1 |
| Price | $207.41 |
| Net Cash Per Share | -$17.96 |
| Equity Per Share | $8.85 |
| Debt / Equity | 2.8 |
| Interest Coverage | 15.7 |
Competitors
| Ticker | Company | Cap ($M) | P/E | Change (%) |
|---|---|---|---|---|
| CLX | Clorox | $26,268 | 23.1 | -0.1% |
| SJM | JM Smucker | $13,476 | 15.6 | 0.2% |
| HSY | Hershey | $31,954 | 26.9 | 0.0% |
| POST | Post Holdings | $6,825 | – | 0.5% |
| CPB | Campbell Soup | $14,823 | 25.1 | 1.1% |
| MKC | McCormick & Co | $24,441 | 32.5 | -0.9% |
| HLF | Herbalife… | $6,204 | 18.2 | 2.2% |
| CHD | Church &… | $21,674 | 28.2 | -0.3% |
If you look at consumer stocks that are competitors, you will find that Clorox is a good buy. It currently has a P/E of 23.1 and market cap of $26,268.
Valuation
| CLX | Industry | S&P 500 | |
| Price / Earnings | 23.1 | 36.4 | 37.7 |
| Price / Sales | 3.7 | 3.4 | 2.7 |
| Price / Free Cash Flow | 19.1 | 24.6 | 24.0 |
| Price / Book | 23.5 | 6.6 | 4.1 |
| Price / Tangible Book | – | 100+ | 100+ |
| EV / EBITDA | 16.4 | 20.1 | 21.5 |
| EPS Predict. Pctl. | 2 | 38 | 28 |
| Cash Flow Predict. Pctl. | 6 | 39 | 22 |
Clorox Stock Technicals
Most of the technical indicators for Clorox stock are BEARISH. This is due to the recent drop in share price which was caused by the sudden price increase. However, I do believe that the stock is consolidating around the $205 level and will be BULLISH again. Both the 5 & 10 exponential moving averages moved today in positive territory for 1 day charts. In addition, the overall trend is still BULLISH if you look at the linear regression of both 100 and 200 bars based on 1 day charts.
| S3 | 174.87 | 193.35 | 202.17 | 187.28 | — |
| S2 | 193.35 | 200.41 | 203.86 | 196.08 | — |
| S1 | 200.30 | 204.77 | 205.56 | 205.76 | 196.83 |
| P | 211.83 | 211.83 | 211.83 | 214.56 | 210.09 |
| R1 | 218.78 | 218.89 | 208.94 | 224.24 | 215.31 |
| R2 | 230.31 | 223.25 | 210.64 | 233.04 | — |
| R3 | 248.79 | 230.31 | 212.33 | 242.72 | — |
