JPMorgan Downgrades Clorox Amid Growth Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 13 2023
0mins
Should l Buy CLX?
Clorox Co (CLX) has seen its stock price decline by 3.00%, hitting a 52-week low amid broader market gains, with the Nasdaq-100 up 1.54% and the S&P 500 up 0.88%.
The catalyst for this decline is a downgrade from JPMorgan, which has lowered Clorox's rating from Neutral to Underweight. Analyst Andrea Teixeria pointed out that despite effective digital transformation and innovation, Clorox is facing below-trend category growth due to external pressures. The company's high exposure to competitive categories, such as trash bags and surface cleaning, along with rising cost pressures from diesel and resins, raises concerns about its market share and profitability. Clorox is also set to report its third-quarter earnings on April 30, with a focus on its growth targets and recovery strategy.
This downgrade reflects significant challenges for Clorox in a competitive market, particularly as it navigates rising costs and changing consumer preferences. Investors will be closely watching the upcoming earnings report for further insights into the company's performance and strategic direction.
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Analyst Views on CLX
Wall Street analysts forecast CLX stock price to rise
14 Analyst Rating
1 Buy
10 Hold
3 Sell
Hold
Current: 91.170
Low
94.00
Averages
118.69
High
152.00
Current: 91.170
Low
94.00
Averages
118.69
High
152.00
About CLX
The Clorox Company is a multinational manufacturer and marketer of consumer and professional products. Its brands include Brita, Burt's Bees, Clorox, Fresh Step, Glad, Hidden Valley, Kingsford, Liquid-Plumr, Pine-Sol and Purell as well as international brands such as Chux, Clorinda and Poett. Its segments include Health and Wellness, Household, Lifestyle and International. Health and Wellness segment consists of cleaning, disinfecting and professional products marketed and sold in the United States. Products within this segment include home care, cleaning and disinfecting products and laundry additives; professional cleaning and disinfecting products, and others. Household segment consists of bags and wraps, cat litter and grilling products marketed and sold in the United States. Lifestyle segment consists of food, water filtration and natural personal care products marketed and sold in the United States. International segment consists of products sold outside the United States.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Clorox Executives to Participate in Global Consumer Conference
- Executive Participation: Clorox's Chair and CEO Linda Rendle, along with CFO Luc Bellet, will engage in a fireside chat at the dbAccess Global Consumer Conference on June 3 in Paris, highlighting the company's commitment to the consumer market.
- Live Webcast Details: The presentation will be webcast live starting at 12:00 p.m. CEST (6:00 a.m. ET, 3:00 a.m. PT), allowing global investors and consumers to gain real-time insights into Clorox's strategic direction.
- Replay Availability: A replay of the webcast will be accessible on the company's website after the event, ensuring that stakeholders who cannot attend live can still obtain critical information, thereby enhancing transparency.
- Company Background: Founded in 1913, Clorox is dedicated to sustainability and enhancing consumer experiences through its trusted brands like Brita, Burt's Bees, and Clorox, showcasing its leadership position in the market.
See More
Clorox Under Investigation for Securities Violations
- Investigation Launched: The Schall Law Firm is investigating Clorox for potential securities violations, focusing on whether the company issued false or misleading statements, indicating possible transparency issues that could harm investor rights.
- Declining Financial Performance: Clorox reported a decrease in gross margin for Q3 2026 compared to the previous year and lowered its full-year gross margin outlook, reflecting challenges in cost control and supply chain management that could impact profitability.
- Significant Stock Drop: Following the disappointing earnings report, Clorox's shares fell by over 9.6% on May 1, 2026, signaling a significant loss of market confidence in the company's future earnings potential, which may affect investor decisions.
- Investor Rights at Risk: The investigation could lead to class action lawsuits against Clorox, allowing affected investors to participate, highlighting increased legal compliance risks for the company that may adversely affect its reputation and shareholder trust.
See More
Investor Strategies Amid Market Highs
- Valuation Warning: The current Shiller P/E ratio stands at approximately 42, a level only previously seen during the dot-com bubble, indicating potential market correction risks that long-term investors should be wary of.
- Hold Winning Stocks: Despite AMD and Shopify's P/E ratios exceeding 140 and 100 respectively, their robust growth prospects justify continued investment, as historical data shows that holding quality assets over the long term often yields substantial returns.
- Maintain Liquidity: Investors should keep significant liquidity, including cash and gold ETFs, to capitalize on buying opportunities during market downturns, with Warren Buffett's liquidity strategy serving as a strong example, as his liquidity now exceeds $397 billion.
- Seek Investment Opportunities: Despite high market valuations, stocks like Clorox present viable investment options, with a P/E ratio of 14, significantly lower than the S&P 500's average of 32, and offering a 5.6% dividend yield, reminding investors to actively seek value investments even in a bull market.
See More
Clorox Under Investigation for Securities Fraud Claims
- Declining Financial Performance: Clorox reported a 140 basis point drop in gross margin to 43.2% for Q3 FY2026, down from 44.6% year-over-year, indicating increasing pressure on profitability amid rising costs.
- Lowered Full-Year Outlook: The company revised its full-year gross margin forecast to a decline of 250 to 300 basis points, significantly worse than the previous expectation of a 50 to 100 basis point drop, highlighting the impact of unexpected supply chain costs and delayed savings.
- Significant Stock Price Drop: Following the disappointing earnings report on May 1, 2026, Clorox's stock fell by $9.33, or 9.67%, closing at $87.11 per share, reflecting market concerns about the company's future performance.
- Legal Investigation Initiated: Pomerantz LLP is investigating whether Clorox and its executives engaged in securities fraud or other unlawful practices, which could further negatively impact the company's reputation and stock price.
See More
Analysis of Three High-Risk Dividend Stocks
- Clorox Dividend Risk: Clorox's dividend yield stands at 5.6%, yet its projected diluted earnings per share (EPS) range of $4.78 to $4.98 suggests that its annual dividend of $4.96 may not be sustainable, especially given its free cash flow of only $380 million, which falls short of the $602 million paid out in dividends, prompting investors to exercise caution.
- Nike Earnings Decline: With a dividend yield of 3.9%, Nike's net income has plummeted by 32% to $2 billion, and its diluted EPS of $1.38 is only slightly above the declared dividend of $1.22 per share, indicating that the company may need to cut its dividend to fund its growth strategy, despite its stock price having dropped nearly 70% over the past five years.
- UPS Dividend Uncertainty: UPS offers a 6.6% dividend yield, but its diluted EPS of $1.02 is significantly below the $1.64 it pays in quarterly dividends, and the company is facing growth challenges after reducing its business with Amazon; although it recently declared a dividend, indicating temporary stability, future uncertainty remains.
- Market Reaction Tepid: Despite the attractive dividends of these three stocks, poor financial conditions have led to low investor interest, with Clorox and Nike experiencing significant stock price declines over the past five years, while UPS has also lost more than half its value, reflecting market caution towards high-risk dividend stocks.
See More
McDonald's and Clorox: Potential Dividend Kings
- McDonald's Dividend Growth: Over the past decade, McDonald's has seen its earnings, stock price, and dividends double, and despite a 6.7% stock price drop this year, its $11.95 EPS easily covers the $7.17 dividend per share, showcasing its strength as a blue-chip stock.
- Clorox's Challenges and Opportunities: Although Clorox faces cost inflation and competitive pressures, its dividend yield has surged to 5.8%, and management expressed confidence in market share growth during the Q3 FY2026 earnings call, highlighting the potential of its brand portfolio.
- Investor Choices: For risk-averse investors seeking reliable passive income, McDonald's is the better buy due to its global diversification and high margins, while Clorox could become a Dividend King if its fundamentals improve.
- Balanced Investment Strategy: A 50/50 investment split between McDonald's and Clorox is recommended, providing a substantial yield of 4.2% while combining McDonald's reliability with Clorox's upside potential if its turnaround succeeds.
See More
Clorox Executives to Participate in Global Consumer Conference
- Executive Participation: Clorox's Chair and CEO Linda Rendle, along with CFO Luc Bellet, will engage in a fireside chat at the dbAccess Global Consumer Conference on June 3 in Paris, highlighting the company's commitment to the consumer market.
- Live Webcast Details: The presentation will be webcast live starting at 12:00 p.m. CEST (6:00 a.m. ET, 3:00 a.m. PT), allowing global investors and consumers to gain real-time insights into Clorox's strategic direction.
- Replay Availability: A replay of the webcast will be accessible on the company's website after the event, ensuring that stakeholders who cannot attend live can still obtain critical information, thereby enhancing transparency.
- Company Background: Founded in 1913, Clorox is dedicated to sustainability and enhancing consumer experiences through its trusted brands like Brita, Burt's Bees, and Clorox, showcasing its leadership position in the market.
See More
Clorox Under Investigation for Securities Violations
- Investigation Launched: The Schall Law Firm is investigating Clorox for potential securities violations, focusing on whether the company issued false or misleading statements, indicating possible transparency issues that could harm investor rights.
- Declining Financial Performance: Clorox reported a decrease in gross margin for Q3 2026 compared to the previous year and lowered its full-year gross margin outlook, reflecting challenges in cost control and supply chain management that could impact profitability.
- Significant Stock Drop: Following the disappointing earnings report, Clorox's shares fell by over 9.6% on May 1, 2026, signaling a significant loss of market confidence in the company's future earnings potential, which may affect investor decisions.
- Investor Rights at Risk: The investigation could lead to class action lawsuits against Clorox, allowing affected investors to participate, highlighting increased legal compliance risks for the company that may adversely affect its reputation and shareholder trust.
See More
Investor Strategies Amid Market Highs
- Valuation Warning: The current Shiller P/E ratio stands at approximately 42, a level only previously seen during the dot-com bubble, indicating potential market correction risks that long-term investors should be wary of.
- Hold Winning Stocks: Despite AMD and Shopify's P/E ratios exceeding 140 and 100 respectively, their robust growth prospects justify continued investment, as historical data shows that holding quality assets over the long term often yields substantial returns.
- Maintain Liquidity: Investors should keep significant liquidity, including cash and gold ETFs, to capitalize on buying opportunities during market downturns, with Warren Buffett's liquidity strategy serving as a strong example, as his liquidity now exceeds $397 billion.
- Seek Investment Opportunities: Despite high market valuations, stocks like Clorox present viable investment options, with a P/E ratio of 14, significantly lower than the S&P 500's average of 32, and offering a 5.6% dividend yield, reminding investors to actively seek value investments even in a bull market.
See More
Clorox Under Investigation for Securities Fraud Claims
- Declining Financial Performance: Clorox reported a 140 basis point drop in gross margin to 43.2% for Q3 FY2026, down from 44.6% year-over-year, indicating increasing pressure on profitability amid rising costs.
- Lowered Full-Year Outlook: The company revised its full-year gross margin forecast to a decline of 250 to 300 basis points, significantly worse than the previous expectation of a 50 to 100 basis point drop, highlighting the impact of unexpected supply chain costs and delayed savings.
- Significant Stock Price Drop: Following the disappointing earnings report on May 1, 2026, Clorox's stock fell by $9.33, or 9.67%, closing at $87.11 per share, reflecting market concerns about the company's future performance.
- Legal Investigation Initiated: Pomerantz LLP is investigating whether Clorox and its executives engaged in securities fraud or other unlawful practices, which could further negatively impact the company's reputation and stock price.
See More
Analysis of Three High-Risk Dividend Stocks
- Clorox Dividend Risk: Clorox's dividend yield stands at 5.6%, yet its projected diluted earnings per share (EPS) range of $4.78 to $4.98 suggests that its annual dividend of $4.96 may not be sustainable, especially given its free cash flow of only $380 million, which falls short of the $602 million paid out in dividends, prompting investors to exercise caution.
- Nike Earnings Decline: With a dividend yield of 3.9%, Nike's net income has plummeted by 32% to $2 billion, and its diluted EPS of $1.38 is only slightly above the declared dividend of $1.22 per share, indicating that the company may need to cut its dividend to fund its growth strategy, despite its stock price having dropped nearly 70% over the past five years.
- UPS Dividend Uncertainty: UPS offers a 6.6% dividend yield, but its diluted EPS of $1.02 is significantly below the $1.64 it pays in quarterly dividends, and the company is facing growth challenges after reducing its business with Amazon; although it recently declared a dividend, indicating temporary stability, future uncertainty remains.
- Market Reaction Tepid: Despite the attractive dividends of these three stocks, poor financial conditions have led to low investor interest, with Clorox and Nike experiencing significant stock price declines over the past five years, while UPS has also lost more than half its value, reflecting market caution towards high-risk dividend stocks.
See More
McDonald's and Clorox: Potential Dividend Kings
- McDonald's Dividend Growth: Over the past decade, McDonald's has seen its earnings, stock price, and dividends double, and despite a 6.7% stock price drop this year, its $11.95 EPS easily covers the $7.17 dividend per share, showcasing its strength as a blue-chip stock.
- Clorox's Challenges and Opportunities: Although Clorox faces cost inflation and competitive pressures, its dividend yield has surged to 5.8%, and management expressed confidence in market share growth during the Q3 FY2026 earnings call, highlighting the potential of its brand portfolio.
- Investor Choices: For risk-averse investors seeking reliable passive income, McDonald's is the better buy due to its global diversification and high margins, while Clorox could become a Dividend King if its fundamentals improve.
- Balanced Investment Strategy: A 50/50 investment split between McDonald's and Clorox is recommended, providing a substantial yield of 4.2% while combining McDonald's reliability with Clorox's upside potential if its turnaround succeeds.
See More
