Clorox stock: A smart bet?

We only believe that it is only 15% lower than in March 2020 at the current price of $ 184 per. Shares Clorox stock (NYSE: CLX) has significant upward potential. Clorox, a disinfectant and sanitary ware manufacturer, saw its stock rise from $ 159 to $ 184 from the recent bottom, much less than S&P, which rose about 70% from its lowest level. Furthermore, the stock is down almost 25% from the mid-2020 high of $ 237. We believe that the Clorox share could regain its recent highs and rise almost 30% from the current level, driven by expectations of strong demand and strong Q2 2021 results. Our dashboard What factors drove the 20% change in Clorox inventory between 2018 and now? have the underlying numbers behind our thinking.

The share price increase was due to an increase in revenue of 10% from DKK 6.1 billion. Dollars in the financial year 2018 to 6.7 billion. Dollars in 2020 (Clorox’s fiscal year ends in June). In addition, this was supported by a decrease of 3% in the outstanding number of shares, which meant that the turnover per. Shares rose about 13%.

The Cloroxs P / S (price-to-sell) multiple fell from 3.3x in 2018 to 3.2x in 2019, but has since further increased to 3.4x at the moment. We believe that the company’s P / S ratio has the potential to increase in the short term due to expectations of continued growth in demand and a favorable policy for shareholder returns and thus drive the share price higher.

Where is the stock going?

The global spread of Coronavirus has increased the need for sanitation and disinfectants, increasing the demand for Clorox products. this is evident from Clorox’s recent Q2 2021 results, where revenue came in at $ 1.84 billion. up from $ 1.5 billion. in the same period last year, a jump of over 20%. This led to pre-tax revenue of $ 332 million, an increase of 40% from $ 235 million in Q2 2020. EPS also rose from $ 1.48 to $ 2.06 during this period.

We expect continued strong demand for hygiene products that can help drive the company’s revenue growth over the medium term, and if Clorox is able to sustainably control costs, this could increase the company’s P / S multiple, and we believe that Clorox the stock may rise nearly 30% from current levels to the highest level in 2020 of $ 237.

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