Have you been paying attention to shares of The Clorox (CLX)? Shares have been on the move with the stock up 6.1% over the past month. The stock hit a new 52-week high of $221.7 in the previous session. The Clorox has gained 42.9% since the start of the year compared to the -11.9% move for the Zacks Consumer Staples sector and the -0.2% return for the Zacks Soap and Cleaning Materials industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 1, 2020, Clorox reported EPS of $1.89 versus consensus estimate of $1.72.
For the current fiscal year, Clorox is expected to post earnings of $6.91 per share on $6.59 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $7.23 per share on $6.73 billion in revenues. This represents a year-over-year change of 4.66% and 2.15%, respectively.
Clorox may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Clorox has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 31.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 27.6X versus its peer group's average of 20.4X. Additionally, the stock has a PEG ratio of 5.5. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Clorox currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Clorox passes the test. Thus, it seems as though Clorox shares could have a bit more room to run in the near term.
How Does Clorox Stack Up to the Competition?
Shares of Clorox have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including ColgatePalmolive (CL), Church Dwight Co. (CHD), and Procter Gamble Company The (PG), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 13% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Clorox, even beyond its own solid fundamental situation.
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The Clorox Company (CLX) : Free Stock Analysis Report
ColgatePalmolive Company (CL) : Free Stock Analysis Report
Church Dwight Co., Inc. (CHD) : Free Stock Analysis Report
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