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My Financial Independence Journey » Stock Analysis » Clorox (CLX) Dividend Stock Analysis

Clorox (CLX) Dividend Stock Analysis

cloroxClorox (CLX) is major manufacturer of cleaning, grocery, and specialty food products.  Clorox’s products are sold in more than 100 countries and about 22% of CLX’s sales came from international sources. Clorox has four major business segments:  1) Cleaning (31% net sales) which focuses on laundry, home care, and professional products (eg Formula 409, Clorox, Pine Sol).  2) Household (31% net sales) which consists of charcoal, cat litter, plastic bags, and container products (eg Fresh Step, Glad, Kingsford).  3) Lifestyle (16% net sales) which consists of food products, water filtration systems, and filters (eg Brita).  4) International (22% net sales) which consists of products sold outside the US.

CLX Basic Company Stats

  • Ticker Symbol: CLX
  • PE Ratio: 19.86
  • Yield: 3.3%
  • % above 52 week low: 76.6%
  • Beta: 0.36
  • Market cap: $11.23 B
  • Website:


CLX vs the S&P500 over 10 years

clx vs sp500

CLX was roughly tracking the S&P500 until 2008 when it started to modestly outperform it.  Over the last 10 years, an investment in CLX would have grown by 98% compared to the 74% that an investment in the S&P500 would have grown.


CLX Earnings Per Share (EPS) & Dividend Growth

clx div and eps

  • 1 year EPS growth: 98.1%
  • 3 year EPS growth: -1.7%
  • 5 year EPS growth: 6.0%
  • 10 year EPS growth: 6.5%


EPS growth for CLX has been steady over the last 10 years, but with a massive dip in 2011 due to a goodwill impairment charge off and massive stock repurchase.


  • 1 year dividend growth: 9.1%
  • 3 year dividend growth: 9.5%
  • 5 year dividend growth: 10.7%
  • 10 year dividend growth: 11.8%


CLX’s dividend growth appears to be steady at around 10% or so.  Dividend growth appears to be decelerating, but it wouldn’t surprise me if it pops back up to the 10% range.

With a starting yield of 3.3% and a growth rate of about 10%, CLX’s yield on cost will grow to well in excess of 8.0% in 10 years.  In order to double the dividend, using the rule of 72, it will take about 7.2 years.


CLX Payout Ratio

clx payout ratio

CLX’s payout ratio has remained very stabile over the last 10 years.  The spike in payout ratio in 2011 was largely due to the goodwill write off, so it can be considered an anomaly.  The average payout ratio is 44% (excluding the 2011 value).  The payout ratio has grown a bit over the last decade, but I’m not concerned that it’s venturing into unsustainable territory.



CLX Cash Flow & Revenue Growth

clx cash flow

  • 1 year revenue growth: 4.5%
  • 3 year revenue growth: -0.6%
  • 5 year revenue growth: 0.9%
  • 10 year revenue growth: 3.1%


Cash flow for CLX has generally mirrored EPS growth.  The dip in 2011 cash flow can be attributed to the substantial stock repurchase.  Revenue growth has been a bit erratic, but generally positive.


CLX Balance Sheet

The current debt to equity ratio for CLX is over 100% and CLX has been carrying a steep debt load for some time.


CLX Risks

CLX isn’t likely to be heavily effected by swings in the economy, after all everyone needs to clean their kitchens.  But CLX is very sensitive to changes in the price of commodities, which are the raw materials for is products.  CLX is also lacking in international exposure.  Previously, I said that Proctor and Gamble (PG) could do more to increase their exposure abroad.  But compared to Clorox, PG is a champion of international exposure.


CLX Valuation Panel

Graham Number

The Graham number represents one very simple way to value a stock.  The Graham number for CLX is $10.36. The stock price is higher than the Graham number, suggesting that CLX may be slightly overvalued valued at the moment.  However, the book value (upon which the Graham number is based) is so low for CLX as to render this metric useless.

Two Stage Dividend Discount Model

Using a risk free rate of 2%, an expected return of 10% and the beta of 0.36, the CAPM model provides a discount rate of 12.9%.  Using a growth rate of 10% for 5 years and a slower growth rate of 7%, the two stage model produced a value of $61.40, suggesting that CLX is overvalued.

One Stage (Gordon Growth) Dividend Discount Model

Using a growth rate of 10.0% and a 12.6% discount rate, the one stage model produces a value of $108.47, suggesting that CLX is overvalued.

Valuation Conclusion

The valuation models are producing values all over the board, but my gut feeling based on the debt load, book value, and PE is that CLX is overvalued.


CLX Cash Secured Puts

I’m not interested in buying CLX at present, so I probably wouldn’t sell puts against it.



I own CLX at the moment, but I don’t think that I’ll be adding to that position soon.  At present, CLX is overvalued, has a lot of debt, and could use some greater international exposure.  CLX has been a solid company for decades, but at present it could use a little sprucing up.  *Insert hideous cleaning products joke here*


Disclosure: Long CLX.

Readers:  What are your opinions about Clorox?

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4 Responses to "Clorox (CLX) Dividend Stock Analysis"

  1. Have you considered selling your position in CLX if you think it’s overvalued? It doesn’t seem logical to hold a stock you wouldn’t recommend. Even if you’d make a capital loss, if the stock truly is overvalued one would expect it to only drop further

    1. MFIJ says:

      I wouldn’t recommend buying CLX at present. But I don’t see any reason to sell it. There aren’t any major material problems with the company and the dividend is sustainable. My ideal holding period is forever, or at least as long as the stock continues to pay dividends. If I was more of a trading mindset, it would make sense to dump CLX and take the profits, but that’s not really my style.

  2. Integrator says:

    In general, I like the Clorox business. Like you, I agree they are carrying too much debt, but historically that doesn’t seem like its really been too much of a problem for them. I often wonder though to what extent people are substituting home brand/store brand cleaning products for branded ones like Clorox, though their revenues don’t appear to be too affected. I’d be a buyer on a major downturn. This is exactly the the of business I’d like to add to my portfolio core at a more reasonable price.

    1. MFIJ says:

      Sometimes I wonder if by virtue of being a personal finance blogger I overstate the importance of generic products. Just because things are on my radar, doesn’t mean that they’re on most other people’s. Once CLX’s price falls a bit, I’d consider adding to my position.

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