The Clorox Company (CLX)

Conclusion

The Clorox Company makes cleaning, disinfecting, household and food products, including Clorox, Pine-Sol, Glad, Kingsford and Brita, and is headquartered in Oakland, California. At a share price of 105.53 USD on 2026-11-09, its market capitalisation is 12.8 billion USD.

The verdict is fair. The fair value band runs from 81.73 to 122.59 USD with a midpoint of 102.16 USD, giving a margin of safety of -3.2% at the current price. Today's P/E of 18.9 sits below its ten-year median of 27.6, and EV/EBITDA of 13.8 below its median of 18.7, while price-to-free-cash-flow of 28.2 is above its median of 24.95. The DCF gives 47.96 USD per share at a discount rate of 8.9%. The reverse DCF implies growth of 12.2% a year, while revenue has compounded at -1.8% over five years and free cash flow per share at -14.9%.

What holds the case up is the return on capital: ROIC of 14.9% against a WACC of 7.3%, and an operating margin of 25.1% against a ten-year median of 17.3%. The weakest numbers are net debt to EBITDA of 4.11, a current ratio of 0.65, and ten downward estimate revisions for the current year in the last 30 days. Any further decline in cash generation would weaken the case most quickly.

Financial health

Financial strength is red, held back by leverage and liquidity, while interest coverage is neutral. Net debt to EBITDA is 4.11 on a trailing basis, and the current ratio is 0.65, with a quick ratio of 0.31. Interest coverage is 6.60, which is a watch-level reading. The Altman Z-score is 2.24, in the grey zone. The Altman model was designed for manufacturers, and the company manufactures, so the result is usable with care. Insolvency risk is medium, at about 12.7% by the estimate of the Ohlson model over one to two years. The company reports negative equity, so the debt to equity ratio is not available and the figures for its equity are not meaningful.

Earnings quality

Earnings quality is green, supported by strong cash conversion and a shrinking share count, although estimate revisions are negative. Free cash flow conversion is 66.9% on a trailing basis and 136.1% over five years. The accrual ratio is -0.4%, which suggests earnings are backed by cash. Stock-based compensation is 1.0% of revenue, and free cash flow after it is 382 million USD. The share count has fallen at a compound rate of 0.8% over five years, which indicates buybacks. The Piotroski score is 4 out of 9. The Beneish M-score is not available. The company beat estimates in six of the last eight quarters, with an average surprise of 13.4%. Analysts have cut the current-year estimate by 1.7% over 90 days and the next-year estimate by 2.9%.

Profitability

Profitability is green. Operating margin is 25.1% against a ten-year median of 17.3%, and the margin has been stable, at 26.9%. Gross margin is 41.9% against a median of 43.6%, and net margin is 9.4% against a median of 10.5%. ROIC is 14.9% against a WACC of 7.3%, and the given ROIC minus WACC value is 7.5%, which creates value. Five-year median ROIC is 12.8%. Return on equity is not available. The DuPont split shows a net margin of 8.7%, an asset turnover of 0.86 and an equity multiplier of 86.6. That multiplier reflects the negative equity base, so return on equity would be inflated by leverage and is not a reliable guide here.

Growth

Growth is red. Revenue has compounded at -3.1% over three years, -1.8% over five years and 1.6% over ten years. Revenue grew in seven of the last ten comparable years. Earnings per share compounded at 58.8% over three years, but at -2.9% over five years and -0.2% over ten years, so the recent rebound follows a longer decline. Free cash flow per share fell at compound rates of -23.8% over three years, -14.9% over five years and -3.2% over ten years. Consensus expects earnings per share to grow 8.0% next year, but estimates have been revised down.

Valuation

Valuation is yellow, with a fair verdict and a margin of safety of -3.2%. The P/E of 18.9 compares with a ten-year median of 27.6, a premium of -31.6%. EV/EBITDA of 13.8 compares with a median of 18.7, a premium of -26.0%. Price-to-free-cash-flow of 28.2 compares with a median of 24.95, a premium of 12.9%. Price-to-sales of 1.77 compares with a median of 2.78, a premium of -36.2%. The DCF gives 47.96 USD per share at a discount rate of 8.9%, with 54% of value in the terminal period. The fair value from historical multiples is 156.36 USD. The fair value band is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium, and is not a price target. The reverse DCF implies growth of 12.2%, against five-year revenue growth of -1.8%. The dividend yield is 4.7%, with a forward yield of 5.0%, but the payout is 132.9% of free cash flow.

Risks

The main risk is leverage. Net debt to EBITDA of 4.11 limits flexibility if earnings fall, and the current ratio of 0.65 means short-term obligations exceed liquid assets. The insolvency estimate of about 12.7% over one to two years adds to this concern. Continued declines in revenue and free cash flow per share would undermine the value case, since the reverse DCF already assumes growth of 12.2%. Ten downward estimate revisions in the last 30 days point to pressure on near-term earnings. The debt to equity ratio, return on equity and the Beneish M-score are not available. This analysis has no debt maturity schedule and no revenue by segment, so it cannot show when debt falls due or which businesses drive results.