Shares of The Clorox Company CLX hit a 52-week high of $131.59 yesterday and eventually closed trade a notch lower at $131.12, surging roughly 29.7% year-to-date. This demonstrates the stock’s inherent strength. The company seems to have gathered momentum from its diversified brand portfolio and better-than-expected first-quarter fiscal 2016 results.
Clorox's diversified brand portfolio helps position the company well compared to its peers and sustain in the currently challenging environment. The company’s approach to brand management allows each of its brands to develop further, through rigorous research and development, marketing strategies, financial control and operating leverage. Given the strength of many of its brands coupled with opportunities in distribution, we believe that the company is set for significant long-term growth.
Clorox remains keen on the smooth execution of its 2020 Strategy, which is aimed at boosting growth for the improvement of categories and overall market share. This is meant to be achieved through investment in brands; development of eCommerce; technological advancements; and focus on the 3Ds – desire, decision and delight.
Apart from these initiatives, the company’s robust first-quarter performance also provided support to the stock. Benefiting from enhanced sales and gross margin, the company’s quarterly earnings of $1.32 per share from continuing operations surged 20% year over year, cruising significantly ahead of the Zacks Consensus Estimate of $1.18. On the revenue front, net sales rose 2.8% to $1,390 million, primarily driven by increased prices and robust volumes, which also beat the Zacks Consensus Estimate of $1,372 million.
Moreover, while management expects fiscal 2016 to bear the brunt of adverse currency fluctuations, greater competition and sluggish global economies, it remains confident of its core business strategies. Consequently, management reiterated its outlook for fiscal 2016, as the company remains on track with its 2020 Strategy. Clorox continues to expect fiscal 2016 sales growth to range from flat to a 1% increase. On a currency neutral basis, sales growth is anticipated to range from 3%–4%. Further, the company still envisions fiscal 2016 earnings to be in the range of $4.68–$4.83 per share.
Zacks Rank
Clorox currently carries a Zacks Rank #2 (Buy). Other favorably-placed stocks in the broader consumer staples sector include Campbell Soup Company CPB, B&G Foods Inc. BGS and The Chefs' Warehouse, Inc. CHEF. Each of these stocks carries a Zacks Rank #1.
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