The search for undervalued companies has yielded many results after the recent downturn in the market. However, none stick out more than The Clorox Co (NYSE:CLX). This international titan has fallen over 6.5% from its 52-week high, and is poised for a large run from its current level.
The Clorox Co (NYSE:CLX) is a worldwide leader in the manufacturing and marketing of consumer products. It is home to some of the most popular brands that many consumers use every single day. In fact, 90% of The Clorox Co (NYSE:CLX)’s brands hold the number one or number two ranking in its market:
|Clorox Disinfecting Wipes||45%||#1|
|Clorox Toilet Bowl Cleaner||35%||#1|
|Tilex / Clorox Bath Cleaner||21%||#1|
|Kingsford / Match Light||72%||#1|
|Brita Water Filtration||68%||#1|
|Clorox Clean-Up Spray||14%||#2|
|Clorox 2 for Colors||26%||#2|
|Fresh Step / Scoop Away||27%||#2|
|Glad Disposal & Food Storage||19%||#2|
|Hidden Valley Salad Dressing||17%||#2|
Fourth quarter results
On Aug. 1, The Clorox Co (NYSE:CLX) released its fourth quarter report for fiscal 2013. The results were mixed, but positive overall.
- Earnings per share of $1.38 vs. expectations of $1.34
- Revenues of $1.5 billion vs. expectations of $1.6 billion
Fiscal 2013 results
|Earnings Per Share||$4.10||$4.31||5.12%|
|Revenues||$5.468 billion||$5.623 billion||2.84%|
|Gross Margin||42.1%||42.9%||80 basis points|
Financial results for fiscal 2013 were in-line with analyst expectations. The most notable statistic in the report is the increase in gross margin. By making more profit on its products, The Clorox Co (NYSE:CLX)’s volume could remain flat and still see its revenue rise. Gross margin could easily surpass the 43.5% mark for fiscal 2014.
In the fourth quarter report, Clorox confirmed its outlook for fiscal 2014. The expectations currently call for:
- 2%-4% sales growth
- Earnings per share of $4.55 to $4.70
- Increased cost savings
- Lower selling and administrative costs
Free cash flow
Clorox reported $583 million in free cash flow for 2013, a 36% increase from 2012. This free cash flow is often used to increase distributions to shareholders, as it has raised its dividend every year since 1977. There is no reason for this streak to end anytime soon.