CLX: Margin Recovery And ERP Progress Will Support Earnings Outlook

Clorox's analyst price target has been reduced by about $5 to reflect softer near term results and guidance, with analysts citing muted growth expectations, operating deleverage from recent disruptions, and a more cautious outlook on topline and earnings across consumer staples.

Analyst Commentary

Bullish analysts acknowledge that Clorox's recent results and guidance were soft, but stress that the outcome was not as negative as many investors had anticipated. Several research notes describe the quarter and outlook as better than worst case fears, helping to support the current valuation despite near term earnings pressure.

Across the coverage universe, analysts are revising models primarily to reflect slower topline growth and operating deleverage, yet most are maintaining neutral oriented ratings rather than moving to more bearish stances. This signals a belief that the stock already discounts a meaningful portion of execution risk and that potential future improvement in sales and margins is an important consideration over a multiyear horizon.

Bullish analysts also highlight that Clorox's challenges are occurring against a broader consumer staples backdrop in which many companies are experiencing estimate cuts. In that context, Clorox is seen as part of a sector wide reset rather than a purely company specific breakdown, which may limit further valuation downside if fundamentals stabilize in the second half of the fiscal year and into FY27.

Bullish Takeaways

• Bullish analysts emphasize that fiscal Q1 results and guidance came in better than feared, suggesting that perceived downside risk to earnings expectations has moderated and helping to support a floor under current valuation multiples.
• Price target reductions are described as largely mechanical model updates rather than a change in thesis. Analysts note that if Clorox executes on margin recovery and resolves ERP related disruptions, the stock may be viewed more favorably.
• Several notes cite the potential for improvement in the second half and into FY27 as a key catalyst, with a focus on stabilizing organic growth and operating leverage as factors that could influence earnings trends and valuation metrics.
• Within a consumer staples sector facing broad estimate cuts, Clorox is seen as reasonably positioned for relative resilience if management delivers on cost controls and regains volume momentum, which some investors may view as an appealing risk reward profile over a longer time frame.

What's in the News

• Clorox reaffirmed its Fiscal Year 2026 earnings guidance, projecting net sales to decline 6% to 10%, reflecting the VMS divestiture and foreign exchange, while maintaining diluted EPS expectations of $5.60 to $5.95, down 14% to 9% year over year. This includes about $0.90 of headwind tied to ERP related shipment timing reversal (Key Developments).
• The company updated its share repurchase activity, disclosing that between July 1 and September 30, 2025, it bought back 329,084 shares for $39.9 million, bringing total repurchases under the May 24, 2018 authorization to 8,395,307 shares, or 6.66% of shares, at a cost of $1.32 billion (Key Developments).

Valuation Changes

• The fair value estimate has fallen slightly, moving from approximately $159.82 to $154.61 per share, reflecting a modestly more cautious outlook.
• The discount rate has risen slightly, increasing from about 6.78% to 6.96%, implying a marginally higher required return for investors.
• Revenue growth has risen meaningfully, with the long-term assumption increasing from roughly 0.52% to 2.15%, signaling improved expectations for top-line expansion.
• The net profit margin has edged lower, declining from about 13.02% to 12.65%, indicating slightly reduced profitability expectations.
• The future P/E has risen modestly, moving from 24.2x to 24.4x forward earnings, suggesting a small increase in the valuation multiple applied to projected earnings.