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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
CLX — frequently asked questions
Is The Clorox Company overvalued?
In our latest published analysis dated 2026-09-20, CLX looks meaningfully undervalued. The price recorded at analysis is USD 83.1 versus our fair value of USD 105; the high endpoint is presented separately as potential value of USD 186. That implies roughly 26.1% upside to fair value at that date.
Our latest published report, analyzed 2026-09-20, gives CLX a fair value of USD 105 and a potential value of USD 186. The conclusion is triangulated across multiple valuation models and weighted by reliability for The Clorox Company's archetype; it is a dated research output, not a live price.
Should I buy CLX now?
Our latest published rating for CLX, analyzed 2026-09-20, is Buy. The Clorox Company looks meaningfully undervalued at the analysis-date price of USD 83.1 versus fair value of USD 105; potential value is USD 186. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for CLX?
The dedicated bear-case section in our report analyzed 2026-09-20 documents The Clorox Company's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is CLX's rating?
Our latest published rating for CLX, analyzed 2026-09-20, is Buy, with a published moat assessment of 6.5/10 (Narrow). It reflects our fair value of USD 105, the potential value of USD 186, and the price recorded at analysis (USD 83.1).
Restoring retail distribution breadth and consumer volume following supply disruptions drives fiscal 2027 net sales toward consensus estimates of $7,630M, enabling fixed-cost absorption to lift operating margins toward the 18.80% industry benchmark and advancing equity value toward Fair value of $104.80.
Main risk
Reported fiscal 2027 net sales growth falls below 8.0% YoY over the next 12 months.
Clorox is rated a Buy as retail distribution recovery offers 26.1% upside to our Fair value of $104.80, balanced against elevated debt of $5,520M.4
We rate The Clorox Company a Buy, indicating that the shares offer an attractive entry point for investors seeking operational recovery.
On September 18, 2026, the report was prepared with the stock at $83.10. This price stands 26.1% below our Fair value of $104.80, with long-term potential reaching $185.52 if turnaround execution accelerates.4
The primary risk is that retail shelf-space recovery fails if store brands permanently displace Clorox products. If fiscal 2027 sales growth stalls below 8.0%, operating cash flow will drop, making it difficult to service $5,520M in debt.4
The main reason the stock can outperform is that brand equity supports retail distribution replenishment. Rebuilding retail shipments is expected to lift sales toward $7,630M in fiscal 2027, restoring operating cash flow above $612M and driving per-share value toward Fair value.1,4
Rebuilding retail shipments after supply disruptions is projected to restore fiscal 2027 revenue by 13.55% to $7,630M.1,4
Defensive Brand Equity
A 42.32% gross profit margin reflects durable consumer brand pricing power above household peer averages.
House recommendation
Buy: operational distribution recovery supports cash generation toward Fair value of $104.80, offsetting risks from elevated leverage and competitor promotions.4
Company overview
The Company operates through strategic business units (SBUs) which are organized into operating segments. Operating segments are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International. The Company's IGNITE strategy accelerates innovation in key areas of the business to drive growth and deliver value for all Company stakeholders. IGNITE focuses on four strategic choices aimed at fueling long-term, profitable growth; innovating consumer experiences; reimagining how the company and its people work; and continuously evolving the product portfolio. In addition, IGNITE's integrated approach to sustainability supports long-term value creation for the Company and its stakeholders.
•Health and Wellness consists of cleaning, disinfecting, sanitizing and professional products marketed and sold in the United States.
In a severe operational stress test where volume restoration stalls and promotional concessions compress operating margins toward 12.0%, free cash flow drops below debt service requirements. With $5,520M in total debt and $602M in annual dividend commitments, post-dividend cash flow turns deeply negative, forcing credit rating downgrades and debt refinancing at elevated borrowing costs.
Clorox possesses a Narrow economic moat grounded in brand intangible assets and scale distribution advantages across household cleaning categories. Its flagship brand commands consumer recognition, allowing the company to sustain a 42.32% gross margin, which exceeds peer averages such as Kimberly-Clark at 37.61%.
However, moat breadth remains narrow rather than wide due to intense competition from branded peers like Church & Dwight (operating margin 18.07%) and retail private label substitution. These competitive pressures constrain long-term pricing leverage and necessitate ongoing promotional spending to maintain retail shelf space.
The highlighted cell is Fair value when every assumption sits at its base level ($104.80). Each row and column shows what Fair value becomes when one assumption moves.
Industry capital expenditures to depreciation stand at 1.07 and capex to revenue is 1.1%, reflecting disciplined maintenance spending rather than aggressive manufacturing capacity additions across consumer defensive peers.
Bull cycle
Demand expansion accelerates as consumer staple volume recovers across retail grocery channels, enabling branded producers to protect gross margins above 45%.
Bear cycle
Persistent consumer trade-down to private label forces defensive promotional concessions, keeping operating margins near 13.7% and limiting organic growth.
§11 Position management
Sizing
3-5%
Moderate position sizing reflects operational turnaround execution potential balanced against elevated leverage of $5,520M debt.4
Risk
Portfolio risk is managed through disciplined stop-loss execution and position sizing caps to insulate capital against leverage and competitive headwinds.
Entry tranches
Level
Action
Why
§12 Investor perspectives
Value and Cash Flow Perspective
Buy
The shares trade at a 26.1% discount to Fair value of $104.80, supported by $612M in operating cash flow and resilient brand equity.4
Turnaround Operational Perspective
Buy
Shipment recovery across retail partners is projected to lift fiscal 2027 revenue by 13.55% to $7,630M, driving operational normalization.1
Balance Sheet and Income Perspective
Buy
Maintain a disciplined 3% to 5% allocation while monitoring debt service on $5,520M debt against operating cash generation.4
§14 Final recommendation
Action
Buy
We recommend a Buy on The Clorox Company based on operational recovery restoring distribution and driving revenue toward $7,630M in fiscal 2027.1
At $83.10, the stock trades at an attractive 26.1% discount to Fair value of $104.80, with robust underlying cash conversion of $612M operating cash flow supporting debt service.
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Sources
The records this analysis drew on, as they stood when it was run.
Macro and cost of capitalData as of 2026-09-20 · Published 2026-09-20 · cited for 1 figureCited in Bear case, Financial history
Market and peer researchData as of 2026-09-20 · Published 2026-09-20 · Provider-adjusted · cited for 2 figuresCited in Competitive moat, Industry & cycle
Market dataData covering 2026-06-30 to 2026-09-18 · cited for 7 figuresCited in
Competitive promotions and private label penetration restrict volume recovery, forcing retailer concessions that impair cash flow and elevate balance sheet refinancing strain.
Ways this thesis can break
Turnaround Volume Restoration Failure
Retailers decline to restore pre-outage shelf space and private label substitution permanently displaces Clorox products, causing FY27 revenue rebound to miss minimum recovery threshold of 8.0% YoY.4
FV impact
-2.1%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 12 months
Promotional Margin Collapse
Price wars and retailer concessions to defend volume against peers compress operating margin below 12.0%.4
FV impact
0%
Operating margin 6 points lower throughout
Trigger
Within 18 months
Debt Refinancing and Interest Rate Shock
Inability to deleverage against $5,520M total debt forces refinancing at wider credit spreads, elevating borrowing costs and pushing cost of capital above 8.58%.2,4
FV impact
-2.3%
Cost of capital 2 points higher
Trigger
Within 24 months
Early-warning signals to monitor
The five developments that would weaken our investment case.
01
Annual Net Sales Growth
Failure to rebound indicates permanent retail shelf-space loss to private label brands following distribution disruptions, impairing top-line recovery and fixed-cost absorption across domestic manufacturing facilities.
Intense promotional concessions to defend market share against Church & Dwight erode core profitability, reducing operating earnings and preventing the business from funding necessary marketing reinvestment.
Diminished cash generation leaves insufficient liquidity to cover capital expenditures and dividend commitments, stalling debt paydown and forcing reliance on additional external borrowing.
Persistent commodity input inflation combined with unrecovered retail pricing power compresses product margins, demonstrating that branded equity is failing to command consumer price premiums over private store alternatives.
Alert ifTotal debt exceeding $5,600M or credit spread widening over next 24 months
Clorox generates economic profits through brand equity in domestic cleaning that commands consumer loyalty, though peer rivalry from Church & Dwight and Kimberly-Clark limits pricing power.
02Scale Distribution Cost Advantage — Scale distribution relationships across primary retail channels enable nationwide fulfillment and shelf presence across domestic cleaning aisles.Moderate
Retail distribution expands faster than expected across grocery channels
Operating margins expand beyond historical baselines through fixed-cost absorption
Brand equity preserves pricing power against competitor promotions
Turnaround execution outpaces expectations as consumer loyalty drives retail shelf replenishment and margin expansion toward Potential value of $185.52.
FY2026 operating cash flow reached $612M with capital expenditures disciplined at $207M, generating $405M in free cash flow. However, annual dividend distributions of $602M exceed free cash flow, creating negative net cash after dividends and restricting organic debt reduction.4,5
Management curtailed share repurchases, recording negative buyback outflows of $256M in FY2026, while prioritizing dividend continuity and debt service on $5,520M in total debt.
The Clorox Company (CLX) trades at 14.2x forward earnings against a peer median of 18.3x. Its EV/EBITDA of 13.7x compares with a peer median of 13.5x. The comparison uses 4 peers: The J.M. Smucker Company, Church & Dwight Co. Inc., Kimberly-Clark Corporation and The Estee Lauder Companies Inc., as of 2026-09-20.
E-Commerce and Omnichannel Household Replenishment
positive
Subscription delivery models and digital re-ordering favor established national brands with high customer loyalty.
Post-Pandemic Health and Disinfection Habits
positive
Sustained household and institutional sanitation standards maintain baseline demand for core cleaning products.
Positioning
Clorox maintains leading market share in domestic bleach and cleaning categories, but must balance trade promotions against peers Church & Dwight and Kimberly-Clark while repairing supply chain relationships.
$83.10
Initiate primary tranche
Report-date price of $83.10 offers a 26.1% discount to Fair value of $104.80.
$78.00-$80.00
Add secondary tranche
Provides enhanced margin of safety if broader market volatility compresses consumer defensive multiples.
Financial statementsData as of 2026-06-30 · Published 2026-09-20 · GAAP · cited for 1 figureCited in Bear case, Financial history
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
