Clorox (NYSE:CLX) reported upbeat results for the fourth quarter of Fiscal 2023 and issued a better-than-anticipated earnings guidance for Fiscal 2024, as consumers continue to buy household goods like cleaning products at higher prices. Clorox shares were up nearly 6% in Thursday’s pre-market trading session.
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Solid Fiscal Q4 Performance
Clorox’s Q4 FY23 net sales increased 12% to $2.02 billion, as a favorable price mix more than offset the impact of lower volumes and currency headwinds. Organic sales increased 14% in the fiscal fourth quarter. The company generated double-digit organic net sales growth across its Health and Wellness, Household, Lifestyle, and International segments.
Adjusted earnings per share (EPS) jumped 80% year-over-year to $1.67, fueled by higher pricing and cost savings. Analysts were expecting sales of $1.88 billion and adjusted EPS of $1.17.
It is worth noting that the company’s Q4 FY24 gross margin expanded 560 basis points year-over-year to 42.7%, as increased pricing and cost savings helped in offsetting the impact of a rise in commodity costs and higher manufacturing and logistics expenses.
Fiscal 2024 Guidance
Clorox expects Fiscal 2024 sales to be flat to 2% higher compared to the previous year. The company anticipates adjusted EPS in the range of $5.60 to $5.90, reflecting an increase in the range of 10% to 16%. Analysts projected adjusted EPS of $5.62 on sales of $7.4 billion for Fiscal 2024.
The company said that its bottom line guidance reflected continued efforts to rebuild margins, despite persisting inflation and challenging economic conditions for consumers. Clorox expects annual cost savings of about $75 million to $100 million, with benefits of nearly $35 million realized in Fiscal 2023. It projects FY24 gross margin expansion in the range of about 150 to 175 basis points
Also, management said that they expect a mild recession in the U.S. in the second half of Fiscal 2024.
Is Clorox Stock a Buy or Sell?
On Wednesday, UBS analyst Peter Grom maintained a Sell rating on Clorox, citing the stock’s valuation. While Clorox exceeded analysts’ estimates, Grom thinks that the company’s recovery is “more than priced in.”
Wall Street has a Moderate Sell rating on Clorox based on one Buy, four Holds, and nine Sells. The average price target of $151.15 implies the stock could be range bound.
