CLOROX CO /DE/ (CLX): what the price requires

The current priced-in claim for CLOROX CO /DE/ (CLX) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Source: https://boothcheck.com/report/CLX

Headline

FieldValue
TickerCLX
CompanyCLOROX CO /DE/
Current price$94.83/sh
CompositionHealth and Wellness 45% / Household 33% / Lifestyle 22%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin today12.9%
Multiple paid18x operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 6.2% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~12.7%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-1.49σ
cohort percentile (of 69 peers)38
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings1.42x3expensive
Relative1.22x4expensive
Growth1.61x5expensive

Families that justify the price: Relative Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.

Per-Model Detail (n=12)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$17.695.36xyesFCF base $0.4B, growth -4% (input: historical growth), terminal g 0.5%, WACC 6.8%, 5yr projection
DCF Exit MultipleGrowth$89.241.06xyesExit EV/EBITDA: 63.7x / 65.7x / 67.7x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$81.601.16xyesP/E 22x (static sector reference · 2026-04), scenarios: 18.6x / 22.0x / 25.4x (bear / base = reference held flat / bull), EV/EBITDA 29.51x
Simple DDMGrowth$53.261.78xyesDPS $4.93, g=0.0% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$96.370.98xyesStage 1: 5% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$58.731.61xyesRev $6.8B, growth -4% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$73.921.28xyesEPS $6.16, growth 5% (input: historical EPS growth), PEG=2.82 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$0.019483.00xyesEBITDA $0.23B × sector EV/EBITDA 14.0x (excluded from median)
FCF YieldEarnings$6.6414.28xyesFCF $380.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$0.78121.58xyesSBC-adj FCF $0.31B (FCF $0.38B − SBC $0.07B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$99.910.95xyesEPS $6.16 × (8.5 + 2×5.4%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$111.010.85xyesRevenue $6.76B × sector P/S 2.0x
PEG Fair ValueRelative$50.141.89xyesEPS $6.16 × (PEG 1.5 × growth 5.4% (input: historical EPS growth)) → PE 8.1x
Earnings YieldEarnings$66.591.42xyesEPS $6.16 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.9b
Net debt / NOPAT (after-tax)4.72x
Net debt / operating income (pre-tax)3.52x
Interest coverage8.5x
Share count CAGR (buyback)-0.4%
Burning cashno

Bullet Takeaways

Bull Case

Start with the risk the headlines lead on, because it is the reason the stock is cheap and also the reason the cheapness may be temporary. Clorox is in the middle of a major ERP system transition, and the disruption has been real: it knocked roughly 19% off net sales in an early fiscal-2026 quarter as retailers drew down inventory ahead of the cutover, and management expects the full year to carry about 7.5 percentage points of negative net sales growth and roughly $0.90 of EPS headwind from it. The question the data answers is whether this is a broken business or a broken quarter. Underlying organic sales fell only about 1% in the most recent quarter while reported sales were essentially flat, which is the signature of a temporary inventory dislocation, not a collapse in end demand.

The franchise underneath is the bull's real asset. Clorox owns leading positions across its three segments, and category leadership in consumer staples is a durable thing: it buys shelf space, pricing power, and the retailer relationships that keep a brand from being rationalized away. The company has held its margin discipline even through the disruption, offsetting part of the cost pressure with cost savings, and it generates steady free cash flow that funds a dividend yielding well above the market. A successful ERP rollout, which management says is already delivering operational benefits, sets up a cleaner cost structure on the other side, which is the efficiency case for owning the disruption rather than waiting it out.

The valuation is where the bull gets its margin of comfort. At roughly 18 times operating income, the price sits in the lower half of the household-products peer multiple range and below what even a modest ongoing decline in operating profit would warrant. The relative-multiple methods place fair value above the current price on a sector earnings multiple, and the dividend-based methods land near it. This is not a stock priced for growth; it is priced for stagnation or worse. If Clorox simply returns to the low-single-digit organic growth its branded categories have historically supported, the way Colgate-Palmolive still posts, with that peer reporting organic sales up 2.6% in Europe and 3.9% in Latin America, the price has room to re-rate toward the sector multiple it currently trades below.

Bear Case

The balance sheet is where the bear case has its grip, because Clorox carries the leverage of a company that has returned more capital than it has retained. Net debt sits at about $2.9 billion, roughly three and a half times trailing operating income, against only about $1.2 billion of liquid assets, and the company's book equity is negative, the legacy of years of buybacks and dividends funded partly with debt. Interest is covered around eight times, so this is not an immediate solvency problem, but it is a thin cushion for a business whose sales are currently shrinking. A leveraged staples company with declining revenue has less room to absorb a bad year than its balance-sheet-rich peers, and the dividend, which already consumes the bulk of earnings, competes with the debt for the same cash.

The competitive pressure makes the revenue softness more than a transition artifact. Clorox sits heavily in categories where private label fights hardest, trash bags and surface cleaning among them, and a stretched consumer trading down to store brands erodes pricing power exactly where the company is most exposed. The structural risk is the one Church and Dwight names in its own filing, that "protracted unfavorable market conditions have caused many of our customers to more critically analyze the number of brands they sell, and reduce or discontinue certain of our product lines", a pressure that falls hardest on brands that are not the clear category leader. Clorox leads some categories and merely competes in others, and the others are where the trade-down risk lives.

Then there is the valuation read once the distorting noise is set aside. The earnings-power and cash-flow methods, run on the disruption-depressed trailing numbers, look alarming, but the more honest signal is that even the cleaner relative methods only modestly justify the price, and the historical growth feeding the models is negative. The price is broadly within the range plausible growth would support, which means there is no real cushion hiding here; it is a fairly priced, leveraged, slow-growth staple. If the ERP recovery disappoints, if private label takes fresh share, or if the dividend's claim on cash collides with the debt, the stock has little valuation cushion to fall back on, because it was never deeply cheap to begin with, only optically cheap on broken numbers.

Valuation

The first thing to say about Clorox's valuation is that the trailing numbers are distorted, so the method that matters most is the one least polluted by the ERP transition. At roughly 18 times operating income, the price sits in the lower half of the household-products peer range, and working the price backward frames it as a bound rather than a bet: the price sits below what even a modest ongoing operating-profit decline would warrant. That is the opposite of the stretched-growth setup most reports describe. The market is pricing Clorox for continued softness, not for compounding.

Read across the method families and the disagreement resolves toward fair-to-slightly-cheap, with heavy caveats. The relative-multiple methods, anchored on a sector earnings multiple of about 22 times, place value modestly above the price. The dividend-discount methods, working off the roughly $4.93 annual payout, land close to the price on plausible growth assumptions. The earnings-power and EV-to-EBITDA frames look extreme, but that is precisely because they capitalize trailing operating profit that the ERP disruption has temporarily crushed; reading them literally would mistake a transition year for the steady state. The cleaner takeaway is that on normalized economics the price is broadly consistent with the household-products cohort, sitting toward the low end rather than at a deep discount.

Solvency is the load-bearing part of the downside, and it is where Clorox is genuinely more fragile than its peers. Net debt of about $2.9 billion against roughly $1.2 billion of liquid assets, with negative book equity from years of capital return, means the balance sheet offers little floor under a bad outcome. Interest coverage around eight times keeps this well clear of distress, and the share count is flat to slightly lower rather than rising, so there is no dilution working against holders. But the dividend already absorbs most of earnings and competes with the debt for cash, so the honest close is that Clorox is a reasonably valued, financially levered staple whose re-rating depends on the ERP recovery restoring the cash generation the leverage requires.

Catalysts

The defining catalyst is the ERP transition and its aftermath. Management quantified the hit plainly: roughly 7.5 percentage points of negative full-year fiscal 2026 net sales growth and about $0.90 of EPS headwind, with full-year net sales guided to decline 6% to 10%. The third quarter showed reported sales essentially flat at about $1,670 million with organic sales down only 1% and GAAP EPS of $1.54, the early evidence that the underlying demand held while the inventory effect washed through. The next several quarters are the test of whether shipments normalize and the promised cost-structure benefits of the new system begin to show.

Margin recovery is the second catalyst. Gross margin has been under pressure from elevated supply-chain and manufacturing costs tied to the ERP rollout, partly offset by cost savings, and management revised full-year gross margin guidance lower as those savings were delayed. A return of gross margin toward its prior level would be the clearest signal that the disruption is behind the company.

Analyst sentiment reflects the wait-and-see posture. The consensus rating is a Hold, with price targets clustered around the mid-$90s to about $106, and JPMorgan moved to an Underweight citing private-label pressure in Clorox's trade-down-exposed categories. The dividend, recently declared at $1.24 per share quarterly, is itself a catalyst-adjacent fact: at a yield well above the market it is a meaningful part of the total-return case, and its security depends on the same cash recovery the ERP turnaround is meant to deliver.

Peer Cohorts (Per Segment, With Filing Citations)

Health and Wellness (reported)

Household (reported)

Lifestyle (reported)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q3 FY2026 results and outlook · CL FY2025 10-K · Q3 FY2026 earnings release · company FY2026 guidance update · analyst notes, 2026 · analyst note, April 2026

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