Analysts Lower Clorox Price Target Amid Service Disruptions and Muted Profit Outlook

Key Takeaways

• Modern ERP implementation and digital transformation efforts are expected to improve supply chain efficiencies, reduce costs, and drive sustained margin and earnings growth.
  
• Product innovation and premium offerings in health, wellness, and cleaning are set to regain market share and fuel organic, long-term revenue growth.
  
• Intensifying competition, cost pressures, and shifting consumer trends threaten Clorox's margins, revenue growth, and ability to sustain its premium brand and pricing advantages.

Catalysts

Engages in the manufacture and marketing of consumer and professional products worldwide.

• The full-scale implementation of a modern ERP system is expected to drive long-term operational efficiencies – improving supply chain visibility, speeding innovation cycles, and reducing structural costs – which should support margin expansion and sustained earnings growth once short-term transition noise normalizes.
  
• Acceleration of product innovation and the launch of new platforms in the back half of fiscal 2026 aligns with consumers' heightened demand for superior and differentiated experiences in household, health, and cleaning products, positioning Clorox to regain market share and drive organic revenue growth.
  
• Increased investment and capability in digital marketing and data analytics, coupled with rising e-commerce penetration, will allow Clorox to engage consumers more directly, optimize pricing and promotional strategies, and improve channel mix, boosting both top line growth and net margin improvement.
  
• Ongoing cost optimization initiatives, including holistic margin management and productivity enhancements enabled by digital transformation, are expected to offset inflationary headwinds and tariffs, stabilizing or expanding gross and EBIT margins over time.
  
• Clorox's expanded focus on differentiated and premium innovations (such as green cleaning solutions and wellness-oriented products) is positioned to capitalize on the global health, hygiene, and wellness focus post-pandemic-supporting premiumization, lifting average selling prices, and supporting long-term revenue and earnings growth.

Clorox Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Clorox's revenue will decrease by 0.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.4% today to 12.6% in 3 years time.
• Analysts expect earnings to reach $881.8 million (and earnings per share of $7.13) by about September 2028, up from $810.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.6x on those 2028 earnings, up from 19.0x today. This future PE is about the same as the current PE for the US Household Products industry at 21.6x.
• Analysts expect the number of shares outstanding to decline by 1.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Clorox Future Earnings Per Share Growth

Risks

• Clorox is experiencing sluggish category growth and faces continued uncertainty around consumer demand, with management acknowledging that expectations for category normalization and sustainable top-line improvements remain unclear, which could negatively impact revenue growth in the coming years.
  
• The company is dealing with heightened price competition and deep discounting in key segments like Glad and Cat Litter, as well as increased promotional intensity from private label and competitors; this could compress net margins and reduce overall earnings as Clorox is forced to defend its market share.
  
• Clorox is highly reliant on a few core premium brands for revenue, and when product superiority falters or execution issues arise (especially post-cyberattack in Cat Litter and Kingsford), it can disproportionately impact top-line performance and limit the effectiveness of strategic innovation.
  
• Rising input costs, persistent inflation, tariffs, and continued supply chain pressure pose ongoing threats to gross margins; while management anticipates offsetting these with productivity and ERP benefits, they acknowledge significant uncertainty and volatility in both costs and their ability to fully offset these headwinds.
  
• Secular consumer trends-such as increasing value-seeking behavior, channel shifting to e-commerce, and a gradual uptick in private label and "natural" alternatives in some categories-could erode Clorox's pricing power and brand advantage, resulting in pressured revenues and challenged earnings growth over the long term.

Valuation

• The analysts have a consensus price target of $133.588 for Clorox based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $166.0, and the most bearish reporting a price target of just $115.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.0 billion, earnings will come to $881.8 million, and it would be trading on a PE ratio of 21.6x, assuming you use a discount rate of 6.8%.
• Given the current share price of $125.68, the analyst price target of $133.59 is 5.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.