Clorox Remains at Neutral - Analyst Blog
August 25 2011 - 12:54PM
Zacks
We are maintaining a long-term Neutral recommendation on
Clorox Corporation (CLX) with a target price of
$67.00 per share. Moreover, the company has a Zacks #3 Rank,
implying a short-term Hold rating on the stock.
Clorox is one of the world's leading manufacturers of consumer
products. Furthermore, the company possesses a strong portfolio of
brands, including Clorox, Glad, Brita, Armor All, Burt's Bees, STP
and Kingsford, whichoffer a competitive edge to the company and
bolsters its well-established position in the market.
Moreover, Clorox has established financial goals to measure its
progress. These goals include 3% to 5% annual sales growth before
acquisitions, and 75 to 100 basis points of annual improvement in
operating margin.
Additionally, the company has plans to carefully manage the
growth of its asset base. If these financial goals are achieved,
management believes it can realize double-digit economic profit
growth and free cash flow of 10% to 12% of net sales.
Further, with the intention of expanding its capabilities in the
areas of health and wellness, Clorox acquired the assets of Caltech
industries in fiscal 2010, which provides disinfectants for the
healthcare industry.
With this acquisition, Clorox has become a provider of bleach
disinfectants to more than 2,500 acute care facilities across the
United States. The acquisition has not only strengthened the
company's product offerings, but also its expertise, R&D and
sales capability.
In addition, Clorox is making intensive capital investments in
information technology systems and capabilities, particularly in
the international market. Moreover, the company is offering R&D
facilities to boost productivity while providing platforms for
growth, product innovation and cost savings. The company believes
that these initiatives will begin delivering benefits later in
fiscal 2014 and beyond.
However, Clorox has a highly leveraged balance sheet with a
long-term debt of $2,125.0 million. The high debt level may
adversely affect the company's financial flexibility as well as the
ability to pursue acquisitions or expand operations
organically.
Above all, the company faces intense competition from other
well-established consumer product companies, both in the U.S. and
in international markets, such as Colgate-Palmolive
Company (CL) and Procter & Gamble
Company (PG). Most of the company's products compete with
other widely-advertised brands within each product category and
"private label" brands and "generic" non-branded products of
grocery chains and wholesale cooperatives in certain categories,
which typically are sold at lower prices.
COLGATE PALMOLI (CL): Free Stock Analysis Report
CLOROX CO (CLX): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
Zacks Investment Research
Colgate Palmolive (NYSE:CL)
Historical Stock Chart
From May 2024 to Jun 2024
Colgate Palmolive (NYSE:CL)
Historical Stock Chart
From Jun 2023 to Jun 2024