Tags: Clorox | return | growth | CLX

Clorox Seeks Return to Growth

By    |   Monday, 31 Oct 2011 12:33 PM

The Clorox Company (CLX) uses its namesake brand plus a portfolio of other brands to provide investors with a highly regarded investment choice. With a long history of growing sales and profits, Clorox came up short in the recently completed fiscal year. Investors should decide whether the company can return to a path of revenue growth.

Clorox manufactures and distributes a portfolio of global household brands. The company focuses on brands which are No. 1 or No. 2 in their markets. Well-known brands include Glad, Kingsford charcoal, Fresh Step cat litter, Hidden Valley salad dressings and Brita water filter products.

The brands are divided into four segments: cleaning (31 percent of sales), household (31 percent), lifestyle (17 percent) and international (21 percent).

For the 2011 fiscal year which concluded on June 30 Clorox saw earnings from continuing operations increase 7 percent to $3.93 per share, up from $3.63 per share. Revenues for the year were flat with sales in both 2010 and 2011 coming in at $5.23 billion.

Fourth quarter results were an improvement over the 2010 fourth quarter, with sales up 4 percent and earnings per share up 20 percent to $1.26 from $1.05 a year earlier.

Growth projections

Management projections for 2012 include increased commodity costs and a corresponding need to increase prices. Clorox guidance for the year predicts 1 percent to 3 percent sales growth and earnings per share of $4 to $4.10. If these expectations are accurate, sales will have been flat for three straight years and earnings growth supported mainly by stock buybacks.

The Clorox stock value is supported by an attractive dividend and a history of dividend increases. For 2011, the dividend rate increased by 20 cents from $2.10 to $2.30 annually. The current distribution rate gives the stock a 3.5 percent yield.

In recent Wall Street actions on the stock, RBS Capital Markets analysts downgraded Clorox to market perform from outperform. Janney Montgomery Scott analyst John San Marco stated he believes competitors Proctor & Gamble (PG) and Kimberly-Clark (KMB) offer better values due to higher growth rates and lower stock valuations.

The company next reports on Nov. 2.

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The Clorox Company (CLX) uses its namesake brand plus a portfolio of other brands to provide investors with a highly regarded investment choice. With a long history of growing sales and profits, Clorox came up short in the recently completed fiscal year. Investors should...
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Monday, 31 Oct 2011 12:33 PM
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