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Consumer products giant Clorox (NYSE:CLX) missed analysts' expectations in Q2 CY2024, with revenue down 5.7% year on year to $1.90 billion. It made a non-GAAP profit of $1.82 per share, improving from its profit of $1.67 per share in the same quarter last year.
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Clorox (CLX) Q2 CY2024 Highlights:
- Revenue: $1.90 billion vs analyst estimates of $1.95 billion (2.4% miss)
- EPS (non-GAAP): $1.82 vs analyst estimates of $1.55 (17.1% beat)
- EPS (non-GAAP) Guidance for the upcoming financial year 2025 is $6.68 at the midpoint, beating analysts' estimates by 3.2%
- Gross Margin (GAAP): 46.5%, up from 42.6% in the same quarter last year
- Organic Revenue rose 3% year on year (14% in the same quarter last year)
- Market Capitalization: $16.38 billion
Founded in 1913 with bleach as the sole product offering, Clorox (NYSE:CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.
Household ProductsHousehold products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.
Sales GrowthClorox is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's revenue has declined over the last three years, dropping 1.1% annually. This is among the worst in the consumer staples industry, where demand is typically stable.
This quarter, Clorox missed Wall Street's estimates and reported a rather uninspiring 5.7% year-on-year revenue decline, generating $1.90 billion in revenue. Looking ahead, Wall Street expects sales to grow 2.6% over the next 12 months, an acceleration from this quarter.
Organic Revenue GrowthWhen analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.
The demand for Clorox's products has generally risen over the last two years but lagged behind the broader sector. On average, the company's organic sales have grown by 3.9% year on year.
In the latest quarter, Clorox's organic sales rose 3% year on year. By the company's standards, this growth was a meaningful deceleration from the 14% year-on-year increase it posted 12 months ago. We'll be watching Clorox closely to see if it can reaccelerate growth.
Key Takeaways from Clorox's Q2 ResultsWe were impressed by how significantly Clorox blew past analysts' organic revenue growth expectations this quarter. We were also excited its gross margin outperformed Wall Street's estimates. On the other hand, its revenue unfortunately missed analysts' expectations. Overall, we think this was a really good quarter that should please shareholders. The stock traded up 4.8% to $140.45 immediately following the results.
