EN
Should You Forget Clorox Stock Near a 52-Week Low?
Key Points
Clorox expects modest organic sales growth in fiscal 2027, but it'll absorb extra costs as it integrates a recent acquisition.
Debt has doubled to about $5 billion.
The stock offers a high 5.8% yield, but the payout ratio is elevated relative to earnings.
Shares of Clorox (NYSE: CLX), the maker of Clorox bleach and Purell hand sanitizer, trade about 9% above their 52-week low of $79.12 and down about 27% over the past year. A beaten-down household name with a high yield can look like a bargain. The problem is that the business is still under real pressure, which is why investors may want to stay away for now.
Organic sales, which exclude acquisitions, fell 8% in fiscal 2026, mostly because Clorox was lapping extra shipments to retailers in the previous year. Management expects organic growth of 3.5% to 4.5% in fiscal 2027, which is an improvement, but other problems may continue to weigh on the stock.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
The purchase of GOJO, the maker of Purell, should add about 9.5 points to fiscal 2027 net sales. But one-time deal costs will hit product manufacturing, and selling and administrative expenses will weigh on margins.
Image source: Getty Images.
Meanwhile, total debt roughly doubled over the past year to about $5.1 billion. The dividend yields about 5.8%, but the company's payout ratio -- the amount of dividends paid relative to earnings -- is elevated at 103%, which isn't sustainable unless earnings grow.
CEO Linda Rendle expressed caution for the next year: "As we begin fiscal year 2027, we expect the operating environment to remain challenging, with continued cost volatility and a value-seeking consumer."
At about 15 times fiscal 2027 consensus earnings estimates, the stock isn't expensive. Still, given flat sales, GOJO integration costs, higher debt, and a stretched dividend payout ratio, investors may want to wait before buying shares.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.