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For informational purposes only. Not investment advice.

The Clorox Company

CLX

FAVORABLE

May 27, 2026

Research Conclusion

ACCUMULATE at ~$90.45. Clorox is a Dividend Aristocrat consumer staples company recovering from 2023 cyberattack + executing ERP modernization + integrating GOJO/Purell ($2.25B, closed April 2026). At 16x FY2026E adj EPS + 5.5% dividend yield, the market discounts time-bounded headwinds. PWFV $105-110 (+16-22%); plus 5.5% dividend yield = ~22-28% three-year total return. Risk: dividend coverage thin at 1.25-1.40x.

Company Overview & Moat Assessment

The Clorox Company is a branded consumer goods company with four segments: Health & Wellness (~35%; Clorox bleach + Purell post-GOJO), Household (~27%; Glad, Fresh Step, Kingsford), Lifestyle (~21%; Brita, Hidden Valley), International (~17%; LatAm). Recovering from August 2023 ransomware attack and executing SAP ERP modernization (causes ~$0.90/share EPS drag FY2026). GOJO acquisition closed April 1, 2026 ($2.25B) — adds Purell (~75% US hand sanitizer market share). Dividend Aristocrat 22+ years.

▲ Bull Case

  • ◆FY2027 adj EPS normalizes to $6.50-7.00 as ERP clears: $0.90/share mechanical recovery; combined with GOJO accretion and gross margin to 47%+
  • ◆GOJO exceeds synergy targets: $200M+ EBITDA contribution; 75% Purell share creates B2B hygiene platform
  • ◆Multiple re-rates from 16x to 18-19x: Discount narrows as recovery confirmed; $130+ stock

▼ Bear Case

  • ◆ERP modernization delays into FY2028: $0.90 headwind persists; EPS to $5; multiple stays 14x = $70
  • ◆GOJO disappoints ($100M EBITDA vs. $200M): $2.25B price was peak valuation; goodwill review
  • ◆Dividend cut: Coverage at 1.25-1.40x = thinnest Aristocrat; any FCF shortfall breaks coverage
Primary Debate on Wall Street

“Whether recovery materializes on schedule (FY2027) or extends to FY2028. Dividend safety + GOJO economics are the secondary debates.”

Top Catalysts
  • ◆ERP normalization in FY2027: $0.90/share EPS recovery
  • ◆GOJO synergy disclosures and quarterly integration milestones
  • ◆Gross margin recovery to 47%+
  • ◆Dividend hike sustaining Aristocrat status (FY2026-2027)
  • ◆De-leveraging pace with ND/EBITDA trending toward 3x post-GOJO
Top Risks
  • ◆ERP delays (MEDIUM probability, MEDIUM-HIGH impact)
  • ◆GOJO disappointment — EBITDA below $100M (MEDIUM probability, MEDIUM-HIGH impact)
  • ◆Dividend cut (LOW-MEDIUM probability, HIGH impact — breaks income thesis)
  • ◆Category secular declines in Kingsford/Brita (MEDIUM probability, MEDIUM impact)
  • ◆Commodity spike (LOW-MEDIUM probability, LOW-MEDIUM impact)

Full Memo Continues

5 more sections, locked

  • ●
    Valuation Range & DCF
    Base/bull/bear fair-value range, WACC, terminal growth, sensitivity to revenue + margin assumptions.
  • ●
    Risk/Reward Assessment
    Position-sizing framework with explicit upside/downside skew and entry conditions.
  • ●
    Management & Capital Allocation
    Multi-year capital-allocation track record, incentive alignment, and management readout.
  • ●
    Monitoring Framework
    What to watch each quarter — leading indicators and inflection signals tracked by the analyst.
  • ●
    Unresolved Questions
    Open analyst questions and follow-up research items — the depth signal.

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Margin of Insight

For informational purposes only. Not investment advice.