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Clorox (CLX) to Report Q4 Earnings: What's in the Cards?

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We expect The Clorox Company CLX to report a year-over-year decline in both its top and the bottom line when it releases fourth-quarter fiscal 2021 results on Aug 3, before market open. The Zacks Consensus Estimate for earnings in the fiscal fourth quarter is pegged at $1.29, which suggests a plunge of more than 46% from the previous fiscal-year quarter’s tally. The consensus estimate for the quarterly earnings has been stable in the past 30 days. For fiscal 2021, the consensus mark for earnings currently stands at $7.58, indicating 3% growth from the last fiscal year’s reading.

The consensus mark for quarterly revenues is $1.91 billion, implying a decline of about 4% from the prior fiscal-year quarter’s reported figure. For the current fiscal year’s revenues, the Zacks Consensus Estimate is pegged at $7.46 billion, hinting at an increase of 10.9% from the preceding fiscal year’s actuals.

This consumer product manufacturer has a trailing four-quarter earnings surprise of 21.4%, on average.

Key Factors to Note

We note that Clorox has been reeling under elevated manufacturing and logistics costs including the temporary pandemic-related expenses for sometime now. On the last earnings call, management had anticipated gross margin to decline year over year in fiscal 2021 on escalated commodity, and manufacturing and logistics costs.

The aforesaid expenses coupled with higher advertising and sales promotion investments might have hurt the bottom line in the fiscal fourth quarter. Its higher spending on brand investments also persists to support innovation pipeline and customer-engagement efforts, which are likely to have weighed on its margins in the to-be-reported quarter.

The company might have witnessed a moderating demand in the quarter under review due to lifting of the pandemic-led restrictions as well as cycling of last year’s high-demand environment amid the pandemic. Adverse foreign currency translations are also acting as headwinds.

On the flip side, Clorox’s fiscal fourth quarter performance is expected to have reflected continued gains from the execution of the IGNITE strategy, which mainly focuses on the expansion of the key elements to pace up innovation in every area of its business.

The company’s focus on cost-saving and productivity initiatives is likely to have partly cushioned its margins. It is witnessing a strong progress in the core International business on the success of the segment's Go Lean strategy. The momentum in the International business might have boosted the quarterly performance.

Management had earlier envisioned sales growth of 10-13% for fiscal 2021, both on a reported and organic basis. Adjusted earnings for fiscal 2021 were estimated to be $7.45-$7.65 per share. The company’s top and the bottom-line guidance for the ongoing fiscal year includes a gain of 1 point and 45-50 cents from the Saudi joint venture acquisition, respectively.

What the Zacks Model Predicts

Our proven model predicts an earnings beat for Clorox this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Clorox Company Price and EPS Surprise

The Clorox Company Price and EPS Surprise
The Clorox Company Price and EPS Surprise

The Clorox Company price-eps-surprise | The Clorox Company Quote

Clorox currently has a Zacks Rank #3 and an Earnings ESP of +2.17%.

More Stocks With Favorable Combination

Here are a few more companies you may want to consider as our model shows that these too have the right combination of elements to beat on earnings:

Darling Ingredients DAR has an Earnings ESP of +10.09% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medifast MED has an Earnings ESP of +7.27% and a Zacks Rank #2, currently.

Church & Dwight CHD has an Earnings ESP of +0.32% and a Zacks Rank of 3, presently.


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