Clorox (CLX) Down 9.3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Clorox (CLX). Shares have lost about 9.3% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Clorox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Clorox Q4 Earnings & Sales Top Estimates as GOJO Supports Sales

Clorox delivered mixed fourth-quarter fiscal 2026 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. However, sales and earnings per share declined year over year due to unfavorable comparison with ERP-related shipments in the prior-year quarter, lower volume and significant gross margin pressure from higher commodity, manufacturing and logistics costs.

CLX Q4 Key Metrics & Insights

Clorox posted adjusted earnings of $1.66 per share for the fourth quarter of fiscal 2026, falling 42% year over year but beating the Zacks Consensus Estimate of $1.64 by 1.2%. Lower sales and gross margin weighed on the bottom line.

Net sales declined 2% to $1.95 billion but surpassed the consensus mark of $1.91 billion by 1.8%. The GOJO acquisition contributed about 10 percentage points to sales, while organic sales fell 13% due mainly to the ERP-related shipment comparison.

CLX Margin Contracts on Costs & Lower Volume

Gross profit declined 13% to $804 million from $924 million a year ago. The gross margin declined 520 basis points (bps) year over year to 41.3%. Lower volume, GOJO inventory step-up costs, higher commodity expenses, and elevated manufacturing and logistics costs more than offset savings initiatives.
The comparison with incremental shipments ahead of the prior-year ERP transition reduced the margin by about 150 bps. The GOJO inventory step-up created another roughly 150-bps drag. The adjusted gross margin, excluding acquisition and integration costs, was 42.8%.
 

Clorox Records Higher Operating Expenses

Selling and administrative expenses increased 0.7% year over year to $298 million from $296 million in the year-ago quarter. These expenses represented 15.3% of net sales and included $21 million of GOJO integration costs.
Advertising costs rose 26.3% year over year to $216 million from $171 million, and represented 11.1% of sales. Research and development expenses were unchanged at $32 million.

CLX Posts Mixed Segment Results

Health and Wellness sales increased 16% year over year to $860 million. The GOJO acquisition contributed about 28 percentage points to growth. Organic sales declined 12% because of the ERP-related shipment comparison, while segment adjusted EBIT fell 15% to $206 million.

Household sales decreased 18% to $524 million, led by a 16-point volume decline and two points of unfavorable price mix. The decrease reflected the ERP comparison and shipments ahead of consumption in the fiscal third quarter. Segmental adjusted EBIT plunged 56% to $69 million amid lower sales and higher commodity costs.

Lifestyle sales declined 17% year over year to $280 million. Volume fell 14 points, while unfavorable price mix reduced growth by another three points. Segment adjusted EBIT decreased 60% to $38 million, mainly because of lower revenues.

International sales increased 4% to $281 million, primarily supported by favorable foreign exchange rates. Organic sales rose 1%. Segment adjusted EBIT advanced 17% to $27 million on higher sales and cost savings.

Clorox Issues FY27 Outlook

For fiscal 2027, CLX expects net sales growth of 13-14%, including 9.5 percentage points from GOJO. Organic sales are projected to rise 3.5-4.5%, including more than 3.5 points of benefit from lapping the ERP-related inventory drawdown.

The company expects a gross margin of 42%, as stronger-than-normal inflation and unfavorable mix are anticipated to more than offset cost savings. Selling and administrative expenses are projected at 16% of sales, while advertising spending is expected to be 10%.

Adjusted earnings are forecast between $5.70 and $6.00 per share, implying growth of 3-8% year over year. Reported earnings are expected between $5.41 and $5.71 per share, including 29 cents of GOJO transaction-related costs.

CLX Cash Flow & Balance Sheet Update

The fiscal 2026 operating cash flow decreased 38% year over year to $612 million due to the Glad Venture Agreement termination payment. Management expects the fiscal 2027 free cash flow to be 11-13% of net sales.

Clorox ended fiscal 2026 with $143 million in cash and cash equivalents. Long-term debt rose to $3.98 billion from $2.48 billion a year earlier, while notes and loans payable increased to $1.09 billion from $4 million following the GOJO transaction.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -21.06% due to these changes.

VGM Scores

At this time, Clorox has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Clorox has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Clorox belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Albertsons Companies, Inc. (ACI), has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended May 2026.

Albertsons Companies reported revenues of $24.94 billion in the last reported quarter, representing a year-over-year change of +0.2%. EPS of $0.42 for the same period compares with $0.55 a year ago.

Albertsons Companies is expected to post earnings of $0.33 per share for the current quarter, representing a year-over-year change of -25%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.5%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Albertsons Companies. Also, the stock has a VGM Score of A.

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

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