The Clorox Company (NYSE:CLX): Has Recent Earnings Growth Beaten Long-Term Trend?
When The Clorox Company (NYSE:CLX) released its most recent earnings update (31 March 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Clorox’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CLX actually performed well. Below is a quick commentary on how I see CLX has performed. See our latest analysis for Clorox
How CLX fared against its long-term earnings performance and its industry
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to assess many different companies on a similar basis, using new information. For Clorox, its latest trailing-twelve-month earnings is US$808.00M, which compared to the prior year’s figure, has jumped up by 21.32%. Since these figures may be fairly short-term, I have created an annualized five-year figure for Clorox’s earnings, which stands at US$597.86M This shows that, on average, Clorox has been able to increasingly raise its net income over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is solely owing to an industry uplift, or if Clorox has seen some company-specific growth. In the last couple of years, Clorox expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US household products industry has been growing its average earnings by double-digit 17.28% over the prior year, and a more muted 9.58% over the previous five years. This means any uplift the industry is profiting from, Clorox is able to amplify this to its advantage.
What does this mean?
Clorox’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Clorox has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Clorox to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CLX’s future growth? Take a look at our free research report of analyst consensus for CLX’s outlook.
Financial Health: Is CLX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.
