Clorox Shares Sink 9.5% on Weak Q4 Results

Shares of Clorox (CLX) were down 9.5% at the close of trading on Tuesday, after the global manufacturer and marketer of consumer and professional products reported worse-than-expected fiscal Q4 results.

The disappointing results were caused by inflationary pressures as well as a decline in sales in three out of four business segments.

Adjusted earnings of $0.95 per share declined 61% year-over-year. The figure was 41 cents short of analysts’ expectations. Clorox reported adjusted earnings of $2.41 per share in the prior-year period. (See Clorox stock charts on TipRanks)

Additionally, net sales decreased 9% year-over-year to $1.8 billion, and lagged consensus estimates of $1.92 billion. The decline in sales reflected an unfavorable price mix as well as a slowdown in shipments from the peak levels seen during the COVID-19 crisis, especially in the Health and Wellness segment.

Investors were also disappointed as the company provided muted guidance for fiscal 2022. The company forecasts adjusted earnings of $5.40 to $5.70 per share, while the consensus estimate is $7.61 per share. Furthermore, sales are projected to decline 2% to 6% compared to FY2021.

Sharing her thoughts on the coming period, Clorox CEO Linda Rendle commented, “As we head into fiscal year 2022, we’re laser focused on operational execution, rebuilding our margins and driving market share improvements in this dynamic environment.”

Rendle added, “We’re also making key multiyear investments to accelerate our digital transformation and strengthen our capabilities and brands to drive profitable growth over the long-term.”

In response to the earnings miss and weak FY2022 guidance, Deutsche Bank analyst Stephen Powers decreased the price target on Clorox from $192 to $153 (6.7% downside potential) and maintained a Hold rating.

Powers attributes the disappointing outlook to muted growth, lower volumes, and escalated costs.

The consensus rating is a Hold based on 2 Buys, 3 Holds, and 3 Sells. The average Clorox price target of $172.88 implies 5.4% upside potential to current levels.