Clorox: Holding Pattern as Price Nudges Past Fair Value
By stockpickr AI | March 1, 2026 | 10 min read
Investment Summary
The Clorox Company (CLX), a staple in the Consumer Staples sector, appears slightly overvalued based on the DCF analysis compared to its current trading price.
Investment Recommendation
Hold
Fair Value: $134.55
Current Price: $139.99
Upside/Downside: -3.88%
The DCF valuation suggests a fair value slightly below the current market price. While the company offers stability and a dividend, the projected growth rates necessary to justify the premium P/E are aggressive given recent revenue trends, resulting in a neutral recommendation.
Key Metrics
- Market Cap: $21.50B
- P/E Ratio: 25.12x
- Forward P/E: 21.22x
- Revenue Growth (YoY): -1.0%
- Net Margin: 8.1%
- ROE: 34.2%
- Debt/Equity: 2.01
- Dividend Yield: 3.20%
Strengths
- Dominant brand portfolio with high household penetration (e.g., Clorox brand market share above 70% in US bleach segment)
- Consistent dividend history, having increased payments for over 10 consecutive years, appealing to income investors.
- Relatively low Beta (0.46), indicating resilience during broader market volatility.
- Strong Return on Equity (ROE) of 34.2%, signaling efficient use of shareholder capital, albeit potentially inflated by high leverage.
Risk Factors
- High Debt-to-Equity ratio of 2.01, increasing financial risk amid rising interest rates.
- Recent revenue contraction (-1.0% YoY), indicating softness in consumer demand or competitive pressures.
- Exposure to fluctuating input costs (chemicals, packaging) that can compress gross margins.