Why Is Clorox (CLX) Up 1.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Clorox (CLX). Shares have added about 1.7% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Clorox due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Clorox Beats Q2 Earnings & Sales Estimates, Updates FY25 OutlookClorox reported second-quarter fiscal 2025 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. However, revenues and earnings declined year over year.A Sneak Peek Into CLX’s Quarterly PerformanceAdjusted earnings per share (EPS) of $1.55 surpassed the Zacks Consensus Estimate of $1.39. However, EPS declined 28% from $2.16 reported in the year-ago quarter. The bottom-line results were impacted by reduced net sales, somewhat negated by cost savings.Net sales of $1.69 billion decreased 15% from the year-ago quarter but surpassed the Zacks Consensus Estimate of $1.64 billion. The decline was mainly driven by lapping the impact of retail inventory restoration post the August 2023 cyberattack, coupled with the divestitures of the VMS and Argentina businesses. Organic sales were down 9%.The gross margin expanded 30 basis points (bps) year over year to 43.8% in the reported quarter, marking the company's ninth consecutive quarter of margin expansion. This growth was driven by substantial cost savings and gains from the divestitures of the VMS and Argentina businesses. This was partially mitigated by lower cost absorption and higher manufacturing, logistics and commodities costs. It remains on track to fully rebuild its gross margin in fiscal 2025.Discussion on CLX’s SegmentsSales of the Health and Wellness segment fell 13% year over year to $628 million. Our model predicted segment sales of $590.4 million. The decline was driven by an 11-point decrease in volume and a two-point unfavorable price mix. The segment-adjusted EBIT dropped 25%, primarily due to reduced sales.The Household segment’s sales declined 11% year over year to $446 million. Our model had predicted sales of $451.8 million for the segment. The segments’ sales were mainly driven by an 11-point decrease in volume. Segment adjusted EBIT fell substantially by 48% from the year-ago quarter due to reduced sales and higher manufacturing and logistics costs, offset by cost savings.Sales in the Lifestyle segment fell 16% year over year to $338 million, driven by a 16-point decrease in volume. We expected net sales of $310.3 million for the segment. Segment-adjusted EBIT declined 36% on account of reduced net sales.In the International segment, sales declined 12% year over year to $274 million. We anticipated net sales of $245.7 million for the segment. This drop in sales was led by the divestiture of the Argentina business and a two-point impact of adverse currency rates. Excluding these, organic sales rose 6%, supported by 6 points of organic volume growth. Segment adjusted EBIT dipped 34% due to the Argentina business.Clorox's Financial UpdateClorox ended the quarter with cash and cash equivalents of $290 million, long-term debt of $2.5 billion and stockholders’ deficit of $41 million, excluding the non-controlling interest of $162 million.CLX’s Guidance for FY25Clorox updated its guidance for 2025. Management expects fiscal 2025 net sales to decline 1% to up 2% compared with flat to down 2% mentioned earlier. Organic sales are anticipated to increase 4-7% versus the previous projection of 3-5%. The guidance excludes 2 points of negative impacts of the divestiture of the company's business in Argentina and 3 points of unfavorable impact from the sale of the VMS business. Also, organic sales are expected to grow in the range of 3% to 5%, excluding the impact of incremental shipments related to the ERP transition.The gross margin is expected to expand 125-150 bps compared with the 100-150 bps increase mentioned earlier, driven by comprehensive margin management efforts, partly offset by cost inflation and higher trade promotional expenses. Selling and administrative expenses are forecasted to be between 15% and 16% of net sales, indicating a 150-bps impact of strategic investments in digital capabilities and productivity enhancements.Advertising and sales promotion spending is projected to be 11-11.5% of net sales, driven by CLX’s continued commitment to brand investment. The company expects the effective tax rate to be 26% for fiscal 2025. Excluding the impacts of the VMS sale, CLX expects an adjusted effective tax rate of 23%.Clorox envisions a GAAP EPS of $5.52-$5.92 compared with the $5.17-$5.42 mentioned earlier. The raised EPS indicates a year-over-year increase of 145-163%.The company projects an adjusted EPS of $6.95-$7.35 versus the $6.65-$6.90 mentioned earlier. The revised adjusted EPS suggests a 13-19% year-over-year increase. This revision reflects a 25-45 cent net benefit from the expected incremental shipments related to the ERP transition. In addition, the adjusted EPS forecast incorporates lower input costs and a reduced tax rate compared to the prior outlook.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.VGM ScoresAt this time, Clorox has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Clorox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerClorox belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Church & Dwight (CHD), has gained 4.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.Church & Dwight reported revenues of $1.58 billion in the last reported quarter, representing a year-over-year change of +3.5%. EPS of $0.77 for the same period compares with $0.65 a year ago.Church & Dwight is expected to post earnings of $0.89 per share for the current quarter, representing a year-over-year change of -7.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.Church & Dwight has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Clorox Company (CLX): Free Stock Analysis Report Church & Dwight Co., Inc. (CHD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks