Clorox: Hold Near Fair Value, But Upside Looks Tepid
By stockpickr AI | March 1, 2026 | 10 min read
Investment Summary
Clorox (COO) in the Consumer Staples sector appears moderately valued based on a DCF analysis, trading slightly above the calculated intrinsic value.
Investment Recommendation
Hold
Fair Value: $128.50
Current Price: $131.71
Upside/Downside: -2.44%
The DCF analysis suggests an implied fair value slightly below the current market price of $131.71, resulting in a minor downside. While the defensive nature and dividend make it attractive, the current valuation reflects modest near-term growth expectations.
Key Metrics
- Market Cap: $23.26B
- P/E Ratio: 24.11x
- Forward P/E: 19.44x
- Revenue Growth (YoY): -1.7%
- Net Margin: 7.4%
- ROE: 34.2%
- Debt/Equity: 2.32
- Dividend Yield: 3.21%
Strengths
- Strong Brand Equity: Clorox maintains market-leading positions in key categories, particularly in household cleaning products.
- Defensive Sector Stability: As a consumer staples firm, COO offers relative stability and reliable dividend payouts, proven during economic downturns.
- Recent Margin Expansion: Management has been focused on pricing actions and productivity improvements, leading to recent gross margin recovery.
- Low Volatility (Beta 0.48): The stock historically offers lower volatility compared to the broader market, appealing to conservative investors.
Risk Factors
- Commodity and Supply Chain Volatility: Significant exposure to fluctuating raw material costs (e.g., resins, packaging) pressures profitability despite mitigation efforts.
- Lagging Growth in Certain Segments: Performance in segments like Natural Care has sometimes lagged, requiring strategic adjustments.
- High Leverage: A relatively high Debt-to-Equity ratio (2.32) makes the company more susceptible to rising interest rate environments.