Can Clorox's Pricing Strength Keep Earnings Buoyant in 2025?

The Clorox Company CLX is effectively capitalizing its pricing strength to support growth and mitigate cost pressures. The company has been proactively adjusting its pricing strategy to address inflation and shifting consumer behaviors. CLX’s multi-faceted pricing policy includes premium pricing for its core brands, with a focus on premiumization and value for consumers.

Clorox has strategically leveraged advanced analytics to identify price inflection points, with a “dual pricing” strategy that selectively reduces prices on value-sensitive SKUs while increasing promotional support on higher-margin products. This approach enables the company to balance affordability for consumers with sustained profitability, reinforcing gross margin expansion amid soft volume trends.

Clorox continues to deliver impressive results, benefiting from disciplined pricing actions, a comprehensive margin-management program and cost-saving initiatives that have steadily bolstered margins. It delivered gross margin expansion for the tenth consecutive time in the third quarter of fiscal 2025. CLX’s streamlined operating model also targets improving efficiency.

The company benefited from ongoing efforts to improve efficiency across manufacturing and logistics, as well as from portfolio changes like the divestitures of the VMS and Argentina businesses, which removed lower-margin operations. CLX has been evaluating potential reformulations with product improvements and select strategic pricing actions. While the company does not project broad-based price increases, it evaluates certain adjustments in categories supported by value and innovation.

Clorox’s holistic margin-management efforts, constant product innovations and IGNITE strategy progress well. Our model anticipates price/mix/other to grow 0.2% in fiscal 2025. The company projects an adjusted EPS of $6.95-$7.35, indicating a 13-19% year-over-year increase compared with our forecast of 14.9% growth to $7.09 for fiscal 2025.

CLX’s Competition in Pricing Strength

Colgate-Palmolive Company CL, The Procter & Gamble Company PG and Church & Dwight Co., Inc. CHD are the major companies competing with Clorox in pricing dominance.

Colgate also leverages its pricing power to aid growth and offset external cost pressures. The company is benefiting from key pricing actions, coupled with its funding-the-growth program and other productivity moves, aimed at driving efficiency and expanding margins. It has revamped its innovation model, leveraged its global scale across price tiers, invested in marketing and reinforced operational capabilities, all to drive brand health and higher household penetration. In first-quarter 2025, Colgate's organic sales were driven by a 1.5% improvement in pricing. We expect the company to benefit from pricing of 2.5% in 2025. Colgate’s competitive pricing moves across its premium oral and personal care products will continue to bolster brand strength and retain market share.

Procter & Gamble’s pricing strength is a vital pillar of its overall business strategy, which looks to enrich consumer value, boost profits and retain a competitive edge. PG’s value-based pricing approach across categories like laundry detergents enables it to reduce dependence on promotional discounts, alongside maintaining competitive pricing and sustaining market share. PG’s pricing strategy is complemented by ongoing product innovations and launches that drive value.

Church & Dwight has been strengthening its market position through a robust brand portfolio, strategic pricing and innovation. Leveraging its strong brand equity, CHD exercises pricing power to bolster profitability and overall growth. As a result, Church & Dwight demonstrated solid brand performance, gaining market share in nine of its 14 major brands and achieving volume share growth in more than 80% of its business in first-quarter 2025.

CLX’s Price Performance, Valuation & Estimates

Shares of Clorox have lost 21.5% year to date compared with the industry’s decline of 4.4%.

From a valuation standpoint, CLX trades at a forward price-to-earnings ratio of 19.48X compared with the industry’s average of 19.93X.

The Zacks Consensus Estimate for CLX’s fiscal 2025 earnings implies year-over-year growth of 14.9%, while that for fiscal 2026 shows a decline of 8.1%. The company’s EPS estimate for fiscal 2025 has been stable, while that for fiscal 2026 has moved south in the past 30 days.

Clorox stock currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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