The Clorox Company (CLX): A Bull Case Theory

We came across a bullish thesis on The Clorox Company on JB Global Capital’s Substack by Jack Beiro. In this article, we will summarize the bulls’ thesis on CLX. The Clorox Company's share was trading at $109.70 as of January 28th. CLX’s trailing and forward P/E were 17.08 and 18.05 respectively according to Yahoo Finance.

The Clorox Company manufactures and markets consumer and professional products worldwide. CLX trades at decade-low valuations of just 16x depressed forward earnings despite producing returns on capital above 35%, creating a compelling 30–40% upside opportunity with a 4.78% dividend yield while waiting for normalization. The stock’s collapse stems from a disastrous $580 million ERP implementation that triggered supply-chain breakdowns, a 17% organic sales decline, and a selloff from $150 to around $104. Yet the disruption is temporary, and the underlying business remains remarkably durable.

Clorox’s 112-year-old portfolio dominates essential categories—61% bleach share, one-third of trash bags, 50% charcoal, and leading positions in toilet care and cat litter—as consumers consistently return to trusted brands even during recessions. These entrenched advantages, supported by co-owned clay mines, advantaged manufacturing locations, and deep retailer relationships, sustain strong gross margins and historically high-teen operating margins. Importantly, no permanent market share losses have appeared; household penetration in bleach even rose during the disruption. Stabilization is already underway, with fill rates recovering to 92% and management expecting full normalization by March 2026, followed by $75–100 million in annual ERP-driven cost savings.

The balance sheet remains solid at 2.0x net debt/EBITDA, supporting dividend continuity. While risks include prolonged recovery, share loss in competitive segments, and margin pressure, valuation embeds these fears excessively. Base-case intrinsic value sits at $134–145 per share, supported by discounted cash flow and peer comparisons, while downside appears limited to the mid-$90s. For investors willing to look through temporary operational noise, Clorox offers an attractive, asymmetric setup: a dominant, high-ROIC franchise temporarily mispriced due to a fixable execution error.

Previously we covered a bullish thesis on The Clorox Company by Business Model Mastery in April 2025, which highlighted the company’s category strength, retailer relationships, and innovation-focused strategy. The company's stock price has depreciated approximately by 19.80% since our coverage. This is because the thesis didn’t play out due to ERP-related disruptions. The thesis still stands as fundamentals remain resilient. Jack Beiro shares a similar view but emphasizes the valuation reset and recovery path.

The Clorox Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held CLX at the end of the third quarter which was 46 in the previous quarter. While we acknowledge the potential of CLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.