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Clorox Exceeds 1Q18 Expectations, Outlook Disappoints

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Clorox Exceeds 1Q18 Expectations, Outlook Disappoints PART 1 OF 5

Here’s How CLX Reacted to Clorox’s Fiscal 1Q18 Results

Stock rises on strong quarter

Clorox (CLX) reported better-than-expected fiscal 1Q18 results. The company’s sales and EPS (earnings per share) exceeded analysts’ estimates. Higher volumes and pricing helped the company post higher sales, and higher cost savings and a lower effective tax rate drove the company’s profitability. However, higher manufacturing costs and commodity price inflation continued to drag down its performance. Following Clorox’s fiscal 1Q18 results, its stock rose 1.2%.

Here’s How CLX Reacted to Clorox&#8217;s Fiscal 1Q18 Results

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Guidance lowered

Despite starting fiscal 2018 on a strong note, the company lowered its fiscal 2018 sales and profitability guidance, which may not go down well with the investor community. Following the company’s guidance reduction, several analysts lowered their target price for the stock.

Barring near-term hiccups, Clorox remains well positioned to drive top- and bottom-line growth through new and innovative products. The company’s strong portfolio of market-leading brands continues to generate sales. Also, the company’s focus on reducing costs and ability to raise prices are expected to drive margin growth.

Stock performance

Clorox stock has risen ~6.7% YTD (year-to-date), lagging behind the S&P 500 (SPX-INDEX), which rose 15.0%. Consumer product companies are seeing downtrends in their stock prices after starting the year on a strong note. Rising commodity costs and heightened competition are projected to pressure earnings.

YTD, Colgate-Palmolive (CL), Procter & Gamble (PG), and Church & Dwight (CHD) stock has risen 7.8%, 3.3%, and 4.5%, respectively. Meanwhile, Kimberly-Clark (KMB) stock has fallen 1.8%.

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