CLX Clorox
Good brands, mature economics, but the price still asks for far too much growth.
The business
Clorox sells household and professional cleaning, disinfecting, trash, charcoal, water filtration, and personal-care products through well-known brands such as Clorox, Glad, Kingsford, Brita, Burt's Bees, and Pine-Sol. It makes money by earning branded-product margins on repeat, low-ticket consumer purchases distributed through major retailers and commercial channels. Demand is understandable and durable, but volume growth is mature and pricing power is not unlimited.
Quality gate · 75/100
Moat & management
| Moat | narrow moat |
| Source | brand |
| Trajectory | stable |
| Management | adequate |
The moat comes mainly from trusted household brands, shelf space, and scale in categories where consumers value reliability. That advantage is real but not dominant: private label, retailer bargaining power, commodity input swings, and slow category growth limit reinvestment opportunities. The moat looks stable, not widening.
Balance sheet leverage is reasonable but not pristine, and buybacks have not materially reduced share count. Capital allocation is acceptable for a mature staples company, but not exceptional enough to justify aggressive growth assumptions.
Owner-earnings inputs
| Owner earnings (TTM) | 380.00M |
| Owner-earnings yield | 3.4% |
| Free-cash-flow yield | 3.4% |
| Growth used (normalized) | 4.0% |
| Market-implied growth (reverse DCF) | 16.3% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.0% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 395.20M | 4.0% | 362.57M |
| 2 | 410.57M | 3.9% | 345.57M |
| 3 | 426.08M | 3.8% | 329.01M |
| 4 | 441.70M | 3.7% | 312.91M |
| 5 | 457.41M | 3.6% | 297.28M |
| 6 | 473.16M | 3.4% | 282.13M |
| 7 | 488.93M | 3.3% | 267.46M |
| 8 | 504.69M | 3.2% | 253.29M |
| 9 | 520.39M | 3.1% | 239.60M |
| 10 | 536.00M | 3.0% | 226.41M |
Key risks
- Private-label competition and retailer pressure erode pricing power
- Commodity, packaging, and logistics inflation compress margins
- Mature categories cannot support the growth implied by the current price
Catalysts
- Margin recovery from productivity savings and easing input costs
- Portfolio simplification and stronger execution in core brands
Recent news
score · 8 articles
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- Clorox Has Fallen 22% and Now Yields 5%. This Dividend King Looks Too Cheap to Ignore.
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~16%/yr owner-earnings growth over 10y (reverse DCF); model credits 4%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.