The Clorox Company (NYSE:CLX) is the kind of company that’s easy to recognize. You probably don’t have to think too hard to come up with one of its products. Clorox bleach, Glad bags, Hidden Valley dressing, Brita filters, Burt’s Bees, and Fresh Step are all familiar names. That familiarity is a big part of what gives Clorox its moat. The company has a strong brand portfolio, but how does its dividend strategy compare with another consumer-staples favorite? Find out here.
That said, the problem is that the latest results show that having strong brands doesn’t make the company immune to weaker demand, rising costs, or pressure on margins.
Why Clorox Still Has a Competitive Edge
The Clorox Company owns a long list of household brands, including Clorox, Glad, Fresh Step, Kingsford, Hidden Valley, Brita, and Burt’s Bees. More than 80% of its sales come from brands that are either No. 1 or No. 2 in their categories. That’s a pretty useful position to be in. When buying trash bags or bleach, most people aren’t going to spend an hour comparing every option on the shelf. If they’ve used a brand before and it worked, they’re often happy to buy it again. That’s where Clorox benefits. Its brands give the company some pricing power and make it easier to hold onto valuable shelf space at major retailers.
The company also added another interesting piece to the business in 2026 when it acquired GOJO, the company behind Purell. That gives Clorox a bigger foothold in professional hygiene and markets such as healthcare. Purell’s existing dispenser network could also help create steady demand for its products. Clorox also bought P&G’s remaining 20% stake in the Glad bags and wraps business. The business still has exclusive licenses to core intellectual property contributed by P&G, which gives Clorox another advantage in a category where competition is pretty intense.
Clorox Has a Moat, But It’s Not Getting Wider Yet
This is where the story gets less straightforward. A great brand portfolio only gets you so far if sales and profits start moving in the wrong direction. Clorox’s fiscal 2026 revenue fell 5.4% to $6.72 billion. Net income dropped from $810 million to $587 million, while diluted EPS fell 26% to $4.81. Margins took a hit as well. Gross margin fell 290 basis points to 42.3%, with higher manufacturing and logistics costs putting pressure on the business.
Some of these problems may not stick around forever. Clorox had issues related to its ERP implementation, and sales timing also affected the results. Consumer demand wasn’t particularly strong either. But even after taking those factors into account, the recent numbers aren’t what you’d expect from a company with an increasingly strong moat.
There’s another problem that isn’t going away: private-label competition. Clorox competes with cheaper store brands in many of its categories, and consumers can become more price-sensitive when budgets are tight. So, we can say that Clorox’s moat is strong, but at the same time, it is under pressure rather than clearly widening. The brands are still valuable, and the distribution network is still an advantage. GOJO could add to that over time. The financial results just haven’t shown that improvement yet. High-quality brands are one thing and high dividend yields are another. See which Dividend Aristocrats offer both here.
Clorox’s Lower P/E Doesn’t Tell the Whole Story
At around $80 a share, The Clorox Company trades at roughly 18 times trailing earnings and about 15 times forward earnings. The forward P/E is actually one of the more interesting parts of the story. Back in September 2025, investors were paying around 17.2 times expected earnings. That dropped to 16.7 times in December and then to roughly 15 times by March 2026. It has stayed around that level since.
In other words, the market has become less willing to pay up for Clorox’s future earnings. At 15 times forward earnings, the stock has a forward earnings yield of roughly 6.7%. The trailing earnings yield is closer to 5.5%-6%. The 10-year Treasury yield was around 5.3%-5.4% in late September 2026. So you’re looking at only about a 1.3 percentage-point difference between Clorox’s forward earnings yield and a long-term government bond. That’s not a massive premium for taking on the risks that come with owning a stock, particularly one whose earnings just took a pretty significant hit.
This also explains why Clorox automatically becomes cheap at 15 times earnings. Yes, the multiple is much lower than the high-teens levels investors were paying before. That’s a positive, but the market didn’t suddenly decide to give investors a bargain. Part of the reason the multiple fell is that the business itself has been struggling. What happens next depends heavily on earnings. If Clorox gets back to steady growth, today’s valuation could start to look quite different. If earnings remain weak, 15 times forward earnings may turn out to be less attractive than it looks at first glance.
The Bottom Line
Clorox still has something many companies would love to have: a collection of brands that consumers already know and trust. That’s a real advantage. Its leading positions, distribution network, and repeat-purchase products give the company a moat, while the GOJO and Purell deal could add another layer to it.
However, the company has some work to do. Revenue and earnings fell sharply in fiscal 2026, margins came under pressure, and private-label competition isn’t going away. The stock has become cheaper on a forward P/E basis, falling from the high teens to around 15 times expected earnings. A roughly 6.7% forward earnings yield certainly makes the valuation look more interesting.
Still, with Treasury yields above 5%, the gap isn’t especially wide. For investors, the bigger question isn’t whether Clorox has good brands. The question is whether those brands can once again translate into consistent sales, margins, and earnings growth. That’s what will ultimately determine whether today’s valuation is genuinely attractive.
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This article is originally published at Insider Monkey.
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