Here’s Why Clorox Is Outperforming Peers

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Part 6
Here’s Why Clorox Is Outperforming Peers PART 6 OF 6

How Clorox’s Valuations Compare to Peers

Valuation summary

On September 11, 2017, Clorox’s (CLX) stock was trading at a 12-month forward PE (price-to-earnings) ratio of 23.9x, which is above the peer group average. Meanwhile, the company’s current valuation multiple is also higher than the benchmark index. The S&P 500 Index (SPX-INDEX) was trading at a forward PE multiple of 18.0x on the same date.

As stated above, Clorox stock is trading at a higher valuation multiple than the peer group average of 22.6x. On September 11, Kimberly-Clark (KMB), Procter & Gamble (PG), Colgate-Palmolive (CL), and Church & Dwight (CHD) stock were trading at forward PE multiples of 18.8x, 22.6x, 24.1x, and 24.8x, respectively.

How Clorox&#8217;s Valuations Compare to Peers

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Note that the forward PE multiple is impacted by numerous factors that include the company’s capital structure, profitability, and growth expectations.

Growth expectations

Clorox is projected to report balanced top and bottom line growth in fiscal 2018. The company’s strong portfolio of market-leading brands and its focus on innovation and effective marketing techniques are expected to boost its sales growth in coming quarters. Management remains upbeat and expects its top line to grow in the range of 2%–4% in fiscal 2018. Meanwhile, higher pricing, cost reduction, and productivity measures are likely to drive the company’s bottom-line growth. Clorox’s EPS is projected to grow in the range of 3%–7% in fiscal 2018.

However, an unfavorable mix, input cost inflation, higher manufacturing and logistics expenses, and adverse currency movements are expected to remain a drag.

Analysts expect the company’s sales to improve 3% in fiscal 2018, while EPS is projected to rise 6.3%.


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