To The Moon

$Clorox(CLX)$

Naturally, the first thing you’re probably wondering when evaluating a company like Clorox right now is: How exposed is it to rising tariffs and trade tensions? That’s completely fair—tariffs are one of the biggest macro risks facing multinational companies at the moment, especially with new proposals to impose across-the-board import taxes and sharply increased tariffs on Chinese goods.

The good news here is that Clorox is relatively well-insulated thanks to its diverse manufacturing footprint. The company has major manufacturing operations located right here in the United States, with key facilities in Chicago, Maryland, and Georgia. It also operates Kingsford charcoal plants in Missouri and Kentucky. These domestic operations allow Clorox to serve the U.S. market efficiently without relying heavily on imports, giving the company flexibility in how it allocates production in the face of shifting trade policies.

Now, it’s true that Clorox does have international exposure, including a manufacturing site in mainland China. That does present some additional risk, especially considering the newly proposed 100%+ tariffs on Chinese imports. However, it’s important to highlight that Clorox does not need to import a significant amount of product from China into the U.S. to sustain its core business. So while its China segment carries some risk, that risk is fairly contained.

This level of flexibility is something I pay close attention to when analyzing businesses in today’s environment. It gives Clorox an important edge: adaptability. It has the infrastructure to shift production as needed and can mitigate direct exposure to the highest-risk tariff scenarios. That’s a strong starting point.

Earning Overview

Clorox is one of those classic “steady-eddy” defensive stocks—not built for high-octane growth, but designed for consistency and durability. And in times of market volatility or economic uncertainty, that’s exactly what a lot of investors are looking for.

Let’s start with the top line. Revenue spiked in 2020—which makes sense. Clorox was a major beneficiary of the COVID-19 pandemic, with skyrocketing demand for disinfectants, cleaning wipes, and other household sanitation products. At the time, Clorox products were literally flying off the shelves.

Fundamental Analysis

But since that 2020 surge, revenue has plateaued. In the trailing 12-month period, Clorox generated $7.165 billion, which is just about where it was in 2022. Still, if you look back further—to 2015—Clorox has grown meaningfully. Back then, revenue was around $5.7 billion, so we’re still talking about over a billion dollars in top-line growth over the past decade.

But here’s the thing: This is not a growth stock. This isn’t the kind of company that’s going to double your money in 12 months or even three years. That’s not why you own Clorox. You buy Clorox because you’re looking for stability, for low correlation to market cycles, and for steady cash flows that are supported by essential products.

Free cash flow

Clorox’s cash flow from operations to sales ratio did dip after the pandemic boom, but it’s currently sitting at 13%, which is a healthy level and not far off from its pre-pandemic average. During the height of the pandemic, that number shot up closer to 30%, but that was unsustainable and reflected an extraordinary moment in time.

Over the long term, I’d expect Clorox to average around 15% cash flow from operations to sales, which is typical for a business of this type. Keep in mind, Clorox does its own manufacturing and manages a lot of physical inventory—it’s a capital-intensive operation. It’s not an asset-light software company where margins can stretch into the 40% range. You need to view it through a different lens.

Another important metric is Return on Invested Capital (ROIC). This also dipped post-pandemic but is now heading back in the right direction. The company is proving it can rebound and operate effectively in a normalized demand environment. Even before the pandemic—in 2019—Clorox was generating ROIC above 25%, which is a fantastic figure for a consumer staples business. That tells me Clorox has historically allocated capital well and maintained strong pricing power and brand loyalty.

Risk And Challenges

When I talk about Clorox being a “safe” investment, I’m referring to its lower volatility and lower correlation to the broader market. Let’s look at the beta: Clorox has a beta of 0.44. That means for every 1% move in the S&P 500, Clorox typically moves just 0.44% in the same direction. So whether the market’s up or down, Clorox is less reactive—less turbulent.

That’s important, especially in this environment where we’re seeing increased volatility, economic uncertainty, and macro-level shocks. If you’re someone who gets uneasy during market sell-offs—or you’re just looking for ballast in your portfolio—Clorox is tailor-made for that role.

Now consider Clorox’s capital structure. I’ve modeled a target of 25% debt to 75% equity, which gives it a healthy balance sheet and enough financial flexibility to withstand downturns. When I run a discounted cash flow (DCF) model using conservative inputs, I get an intrinsic value per share of $176.

Compare that to the current market price of around $141, and you’re looking at a margin of safety of roughly 20%. And that’s before we consider its defensive nature, which arguably makes that discount even more appealing.

Clorox is also trading near its 52-week low of $127, and well below its 52-week high of $171. In fact, while the broader market was down over 4% today, Clorox stock was actually up 0.75%. That says a lot about investor appetite for defensive names right now.

Market Sentiment

Clorox stock is currently trading around $139.78, having gained a bit in the most recent trading session. Over the past three months, it has underperformed the broader market, with a return of about -9.2%, compared to the S&P 500’s drop of -7.8%. On the bright side, the stock’s beta is extremely low at 0.032, indicating that it’s far less volatile than the average stock—making it attractive for risk-averse investors.

Clorox recently posted earnings of $1.55 per share, beating consensus estimates. Revenue came in strong as well, at $2 billion, exceeding expectations. The company also offers a solid dividend yield of 3.48%, with quarterly payments of $1.22 per share, making it a reliable income-generating stock in the consumer staples space.

Market Commentary

Some analysts have recently lowered their price targets while maintaining neutral stances, reflecting uncertainty around Clorox’s near-term growth. Commentary from financial bloggers and online sentiment appears neutral to slightly bearish, especially compared to other consumer defensive names, although Clorox’s strong brand recognition and steady cash flow remain key positives.

Analyst Ratings & Price Targets

Analyst sentiment is mixed to cautious. The stock has a consensus rating of "Reduce," based on a breakdown of 3 Sell, 9 Hold, and only 1 Buy rating. The average price target is $153.83, which implies about 10% upside from the current price. Price targets range widely, from a low around $139 to a high near $198, reflecting differing opinions on Clorox's growth potential.

Valuation

Let’s look at the forward price-to-earnings (P/E) ratio, which is currently around 19.3. That’s one of the lowest levels we’ve seen going back to 2021, indicating the stock is on sale by historical standards. Whether I evaluate Clorox through the lens of DCF analysis or earnings multiples, the conclusion is the same: Clorox is undervalued.

And when you layer in all the macro factors—rising tariffs, slowing growth, potential global trade tensions—it’s no wonder investors are looking for defensive, non-cyclical businesses to add to their portfolios.

Clorox sells essential products—things like bleach, cleaning supplies, trash bags, and charcoal. These aren’t luxury goods or discretionary purchases—they’re staples. People keep buying them regardless of whether they’ve gotten a raise, lost a job, or are worried about the stock market.

That’s why Clorox is a great example of what I call a “portfolio stabilizer”—a stock that won’t shoot the lights out, but one that can help anchor your returns when the rest of the market is volatile or uncertain.

Conclusion

Clorox continues to be viewed as a defensive, stable company that can weather economic uncertainty. Its recent financials show solid performance, but sentiment is tempered by its lack of strong near-term growth drivers and recent underperformance relative to the market. That said, its low volatility, dependable dividend, and essential product portfolio make it a compelling hold or defensive buy—especially in a more cautious, risk-off environment. So to answer the question I posed at the top: Yes, I do believe Clorox is a buy at current valuations.

You’re getting a high-quality, brand-strong business with steady cash flows, low beta, and solid returns on capital. And you’re getting it at a discount, with added protection from market volatility, economic downturns, and geopolitical shocks.

If you're building a portfolio that’s meant to last—not just chase the next trend—Clorox deserves a long, hard look.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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