Episode Details

The Clorox Company (CLX) Q4 FY2026 — Q4 FY2026 (quarter ended June 30, 2026): net sales $1.948B vs a $1.915B Street bar - a beat - but DOWN 2% y/y with organic sales -13%. Adjusted diluted EPS $1.66 vs a $1.64 bar - also a beat - but DOWN 42% from $2.87. GAAP diluted EPS $1.34, down 50% from $2.68. Gross margin 41.3% vs 46.5%, -520bp. The results 8-K was accepted 4:12pm ET Monday Aug 3, AFTER the close, so TUESDAY Aug 4 is the reaction: CLX closed $104.67, UP 6.52% from Monday's $98.26, on 5.29M shares. Friday Aug 7 closed $105.15. Clorox guided FY2027 adjusted EPS to $5.70-$6.00, up 3% to 8%, and the stock rose 6.52%. But in the same release Clorox states that the pre-ERP retailer buy-in added about 90 cents to FY2025 EPS, that the FY2026 inventory drawdown reduced FY2026 EPS by about 90 cents, and that FY2027 laps it - the reconciliation table prints the FY2027 ERP impact as nil. Strip the 90 cents out of both years: FY2025 adjusted EPS was $7.72, so clean $6.82. FY2026 was $5.53, so clean $6.43. Against a FY2027 midpoint of $5.85 that is not 3% to 8% growth - it is a 6.7% to 11.4% DECLINE. And FY2027 carries three extra quarters of the $2.15B GOJO/Purell acquisition while it does it. THE CALL: HOLD (3/5, THE BEAT WAS REAL. THE GROWTH IS A LAP) — base-case value ~$101.0 vs ~$105.15 today. KEY METRICS: - CALL: HOLD 3/5, fair value $101 vs the $105.15 Aug 7 close (-3.9%). DCF $100, multiple test $102, bear $80, bull $120, buy under $92. Street: HOLD, 3 buy / 20 hold / 6 sell, 30-day target average $96.57. - THE PRINT: net sales $1.948B (-2%, organic -13%) vs a $1.915B bar; adjusted EPS $1.66 vs $1.64, down 42% from $2.87; GAAP EPS $1.34, down 50%; gross margin 41.3% vs 46.5%; adjusted EBIT $318M vs $460M. - THE ANGLE: Clorox sizes the ERP swing at +$0.90 in FY25 and -$0.90 in FY26, and nil in FY27. Clean FY25 $6.82, clean FY26 $6.43, FY27 guide $5.70-$6.00. Guided +3% to +8% is really -6.7% to -11.4%. What to watch: UP: a real beat on both lines - revenue $1.948B vs $1.915B and adjusted EPS $1.66 vs $1.64. A 4.8% dividend yield, $5.00 annualised, raised in every year of a 22-year record. Adjusted free cash flow $881M, up from $761M and 13.1% of sales. The five-year, $580M digital/ERP programme completed in FQ3 and costs nothing in FY2027. Health and hygiene is above half of net sales for the first time after the Purell deal. DOWN: clean FY2026 adjusted EPS was $6.43 against an FY2027 guide of $5.70-$6.00. Net debt doubled to $4.93B - 3.9x EBITDA - against $90M of total Clorox stockholders' equity. The 10-K's own pro-forma table puts FY2026 net earnings at $625M against FY2025's $715M with GOJO owned in BOTH years. GOJO's first quarter inside Clorox added $211M of sales and $6M of net earnings. FY2027 gross margin is guided to about 42%, BELOW this year's adjusted 42.8%. And the July dividend raise was $1.24 to $1.25 - 0.8%, the smallest in the 22-year record. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.