Based on The Clorox Company’s (NYSE:CLX) earnings update in June 2018, the consensus outlook from analysts appear bearish, with profits predicted to drop by -0.4% next year relative to the past 5-year average growth rate of 7.1%. Currently with a railing-twelve-month profit of US$823.0m, the consensus growth rate suggests that earnings will drop to US$819.9m by 2019. Below is a brief commentary around Clorox’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Clorox in the longer term?
The longer term expectations from the 12 analysts of CLX is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for CLX, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$823.0m and the final forecast of US$881.1m by 2021, the annual rate of growth for CLX’s earnings is 3.2%. EPS reaches $7.14 in the final year of forecast compared to the current $6.37 EPS today. Earnings growth appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. However, the expansion of the current 13.4% margin is not expected to be sustained, as it begins to contract to 13.2% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Clorox, I’ve put together three relevant aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Clorox worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Clorox is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Clorox? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.