Global consumer product giant, The Clorox Company (CLX) has been performing remarkably well as evident from its strong quarterly performances and solid year-over-year growth of 23.4%.
On analyzing the factors that illustrates the stock’s growth story, primary focus falls on its positive earnings surprise history. In the trailing three quarters, Clorox has surpassed the Zacks Consensus Estimate thrice, adding up to an average surprise of 4.31%. Further, the company has beaten the Zacks Consensus Estimate consecutively in the past three quarters, posting an average surprise of 6.8%.
Additionally, an optimistic fiscal 2015 outlook, solid cash flows and decent dividend yield also explain the company’s inherent strength.
In the last concluded quarter, Clorox reported adjusted earnings of $1.10 per share, increasing 5% from the year-ago quarter and beating the Zacks Consensus Estimate of $1.03. Since the announcement of the company’s first-quarter fiscal 2015 results on Oct 31, 2014, Clorox’s shares have increased 10.7%.
The year-over-year rise in earnings was mainly driven by cost savings, price increases and higher volumes, partially offset by unfavorable exchange rates, increased manufacturing and logistics expenses as well as investments toward incremental demand-building.
Net sales inched up 1% year over year to $1,352 million from $1,343 million in the year-ago quarter, mainly driven by increased prices and higher volumes. On a currency neutral basis, revenue increased 3% in the quarter. Moreover, Clorox’s sales surpassed the Zacks Consensus Estimate of $1,330 million.
Expecting better category-wise performances, market share gains and further product innovation across its brands, Clorox has reaffirmed its sales growth and earnings forecast for fiscal 2015. On a currency neutral basis sales are expected to grow in the range of 1%–3% while earnings are projected to come between $4.35 and $4.50 per share.
Furthermore, Clorox, which competes with Colgate-Palmolive Co. (CL), The Procter & Gamble Company (PG) and Church & Dwight Co. Inc. (CHD), is known for its shareholder friendly moves. In Nov 2014, the company announced a quarterly dividend of 74 cents per share, payable on Feb 13, 2015 to shareholders of record as on Jan 28, 2015. This currently yields a solid 2.69% on an annualized basis, while the company has a payout ratio of 74%.
Since 1983, the company has increased its dividend from 1.875 cents to 74 cents. We believe that its continuous dividend payment and increments reflect its earnings growth potential and cash flow generation capabilities.
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