Clorox Stock Jumps 13.1% in a Month. Can the Gains Keep Building?

The Clorox Company CLX has climbed 13.1% in the past month, rebounding as investors digest its fiscal fourth-quarter results and fiscal 2027 outlook. The advance has come despite pressure from inflation, subdued category demand and softer margins.

Clorox’s recent earnings beat, the GOJO acquisition and completion of its U.S. enterprise resource planning rollout provide reasons for optimism. The durability of the rally, however, will depend on whether those catalysts translate into better underlying sales growth and margin recovery.

What is Fueling CLX's Rebound?

Fiscal fourth-quarter adjusted earnings of $1.66 per share topped the Zacks Consensus Estimate of $1.64 by 1.2%. Sales of $1.95 billion also beat the consensus mark by 1.8%, though they fell 2% year over year. GOJO added about 10 percentage points to reported sales growth, partly offsetting a 13% organic sales decline that largely reflected the ERP shipment comparison.

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For fiscal 2027, management expects net sales to rise 13-14%, including about 9.5 points from GOJO. Adjusted earnings per share are projected at $5.70-$6.00, up 3-8%. ERP productivity benefits are expected to begin later in the year. Home Care has posted eight consecutive quarters of share growth, while Glad Trash and Hidden Valley Ranch returned to share growth in the fiscal fourth quarter.

The Rally Still Faces Margin and Demand Tests

Profitability remains the central challenge. Fiscal 2026 gross margin fell 290 basis points to 42.3%, while fourth-quarter gross margin declined 520 basis points to 41.3%. Management expects fiscal 2027 gross margin of about 42%, with cost savings more than offset by higher-than-normal inflation and negative mix. Inflation is projected to exceed $200 million, more than twice the company's historical $75-$100 million range.

Headline growth also overstates the underlying demand picture. Fiscal 2027 organic sales are expected to increase 3.5-4.5%, but more than 3.5 points of that growth comes from lapping the prior-year ERP inventory drawdown. Excluding that comparison, organic sales are expected to be flat to up slightly. Fresh Step remains early in its reset, while value-seeking consumers and a soft grilling category add risk.

Peer Trends Put CLX's Setup in Context

The Procter & Gamble Company PG reported flat organic sales in its fiscal fourth quarter and 1% organic growth for fiscal 2026. Its results show that even large branded peers are navigating a muted growth environment.

Church & Dwight Co., Inc. CHD, meanwhile, posted second-quarter organic sales growth of 5.8% and a 40-basis-point increase in adjusted gross margin to 45.4%. CLX trades at 17.7X forward 12-month earnings, slightly below its sub-industry's 18.2X multiple but near the consumer staples sector's 17.2X.

Can Clorox Keep the Gains Building?

Clorox can extend its rebound if GOJO integration, ERP productivity and improving market shares support healthier underlying organic growth while margins recover. The fiscal 2027 setup offers catalysts, but much of the expected top-line improvement still comes from acquisition and comparison effects rather than broad demand acceleration.

Near-term signals remain cautious. The Zacks Consensus Estimate for fiscal 2027 earnings has declined 3.8% in the past four weeks to $5.82 per share. CLX currently carries a Zacks Rank #4 (Sell), with a Value Score of C, Growth Score of D, Momentum Score of F and VGM Score of D. Recent price strength has not yet been matched by favorable earnings revisions or Style Score support, keeping execution in focus.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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