Clorox (CLX) Down 0.3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Clorox (CLX). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Clorox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Clorox Q2 Earnings Miss Estimates, Lower Organic Sales Hurt

Clorox reported mixed second-quarter fiscal 2026 results, wherein the bottom line fell short of the Zacks Consensus Estimate and the top line beat the same. Both metrics also decreased on a year-over-year basis. Also, organic sales fell year over year.

Taking a Sneak Peek at CLX’s Quarterly Performance

The company posted adjusted earnings of $1.39 per share, which missed the Zacks Consensus Estimate of $1.43. This represents a 10% decrease from $1.55 per share in the same quarter last year on soft gross profit and lapping tax rate benefits in the prior period.

Net sales of $1.67 billion dipped 1% from the year-ago quarter, mainly due to lower consumption and partially offset by shipments ahead of consumption for several businesses. Organic sales also dropped 1% in the reported quarter. However, the metric beat the consensus mark of $1.63 billion.

Gross profit slipped 2.2% year over year to $722 million. We note that the gross margin contracted 60 basis points (bps) year over year to 43.2%, thanks to elevated manufacturing and logistics costs, partly offset by cost savings.

Discussion on Segments

Sales of the Health and Wellness segment grew 2% year over year to $643 million, reflecting a two-point increase in volumes, mainly owing to incremental shipments related to the final phase of the ERP transition and robust shipments in Professional Products. Our model predicted segment sales of $615.4 million. The segment adjusted EBIT dipped 2% on elevated manufacturing and logistics costs, partly offset by increased sales.

The Household segment reported a 6% year-over-year decrease in net sales to $419 million, due to three points of lower volume and three points of negative price mix. Our model predicted sales of $432.6 million for the segment. Segment adjusted EBIT slipped 54%, mainly due to weak sales, and elevated manufacturing and logistics costs, somewhat offset by cost savings.

Sales in the Lifestyle segment tumbled 5% year over year to $321 million, reflecting five points of lower volumes from reduced consumption. We expected net sales of $324.5 million for the segment. Segment adjusted EBIT rose 3%, primarily due to reduced advertising investments, offset by lower sales.

The International segment saw a 7% rise in net sales of $294 million due to price mix, favorable foreign exchange rates and increased volumes. Organic sales also grew 5%. We expected net sales of $268.5 million for the segment. Segment adjusted EBIT surged 48%, mainly due to higher net sales and cost savings.

Clorox's Financial Update

Clorox ended the quarter with cash and cash equivalents of $227 million, long-term debt of $2.49 billion and stockholders’ deficit equity of $125 million, excluding the non-controlling interest of $160 million.

Guidance for FY26

Management is maintaining the outlook for net sales, gross margin and adjusted EPS for fiscal 2026. Net sales are still expected to decline 6-10% compared with the prior year. This projection includes less than one point of negative impact from the divestiture of the VMS business. Organic sales are anticipated to decrease 5-9%, largely caused by a 7.5 point decline due to the reversal of incremental shipments made in the previous year as part of the ERP transition.

The gross margin is projected to decline 50-100 basis points. A significant portion of this decline, approximately 100 basis points, is attributed to the reversal of the prior year’s ERP-related shipment impact.

Adjusted EPS is still envisioned to be between $5.95 and $6.30, indicating a decline of 23-18% from the previous year. This figure excludes the estimated 35 cents per share impact from long-term investments in digital capabilities and productivity enhancements, while accounting for the 90 cents per share negative impact related to the ERP-related shipment reversal.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Clorox has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Clorox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Clorox is part of the Zacks Consumer Products - Staples industry. Over the past month, Church & Dwight (CHD), a stock from the same industry, has gained 1.9%. The company reported its results for the quarter ended December 2025 more than a month ago.

Church & Dwight reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of +3.9%. EPS of $0.86 for the same period compares with $0.77 a year ago.

Church & Dwight is expected to post earnings of $0.93 per share for the current quarter, representing a year-over-year change of +2.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Church & Dwight. Also, the stock has a VGM Score of C.

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

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