Shares of The Clorox Company (CLX) hit an all-time high of $88.63 on Thursday, Mar 28, before closing at $88.53. This Zacks Rank #2 (Buy) global consumer product company beat its previous 52-week high of $87.59 and generated a whopping return of approximately 21.9% since Dec 31, 2012. Average volume of shares traded over the last 3 months came in at approximately 884K.
An impressive record of beating the quarterly earnings expectations, revenue growth, a positive fiscal 2013 outlook, solid cash flows and a decent dividend yield enabled the shares of Clorox to reach a new high. Moreover, Clorox currently trades at a forward P/E of 20.43x, higher than the industry average of 18.32x.
With respect to earnings surprise, Clorox has been beating the Zacks Consensus Estimate for the last 9 quarters. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 11.1%.
Further, Clorox posted impressive earnings and sales comparisons for the second quarter of fiscal 2013. The company’s adjusted earnings of 90 cents per share jumped approximately 13.9% from the year-ago quarter’s earnings of 79 cents and beat the Zacks Consensus Estimate of 81 cents.
The company’s earnings benefited from improvements in revenues as well as gross margins, offset by higher selling and administration expenses as it continues to invest in information technology (IT) systems.
Net sales elevated 8.5% year over year to $1,325 million from $1,221 million in the year-ago quarter, mainly due to improved prices and volumes. Moreover, total revenue came in ahead of the Zacks Consensus Estimate of $1,270 million. Total volume increased 5% from the comparable quarter last year.
Expecting better category-wise performances, market share gains and further product innovation across its brands, Clorox raised its sales growth forecast to 3%–5% for fiscal 2013 from 2%–4% projected earlier.
In fiscal 2013, the company expects operating income margin to expand 25–50 basis points (bps) on the back of efficient cost savings, the benefit of price increases and flat commodity cost forecasts. Further, Clorox raised its fiscal 2013 earnings guidance range to $4.25–$4.35 per share from the previous range of $4.20–$4.35.
Clorox is known for its shareholder-friendly moves. Since 1983, the company has increased its dividend from 1.875 cents to 64 cents. This currently yields a solid 2.9%, while the company has a payout ratio of 58%. We believe that its continuous dividend payments and increments reflect the growth potential of its earnings and cash flow generation capabilities.
Apart from Clorox, other consumer products companies like Ecolab Inc. (ECL), Church & Dwight Co. Inc. (CHD) and Procter & Gamble Company (PG) focus on improving shareholder value by paying regular quarterly dividends.
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