Does the Post-Pandemic Company Clorox Company Offer Opportunity?

During the height of the Pandemic, The Clorox Company's stock prices went up and down as consumers rushed to get rid of their cleaning products. As of November 2020, the company reported its strongest quarterly sales growth in more than two decades, and raised its full-year revenue forecast as hygiene demands required more than just cleaning products, but also demanded water filters and charcoal for more outdoor grilling during the Pandemic.

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The stock hit an all-time high of $240 per share, but the gains have not continued to stay on their feet. Clorox's stock has been declining since the summer of 2020 and has fallen below huge highs.

The company has done its best to offset the challenges of increased commodity, manufacturing and logistics costs with pricing and cost savings initiatives. The three year average growth rate for net sales was 3%.

About the Clorox Company 

It's not all white. The Clorox Company has a wide range of consumer products, despite the fact that household bleach has the same name.

Clorox was founded on May 3, 1913, as the Electro-Alkaline Company by five Oakland, California-area businessmen, and just one had chemistry training. The company's first product, Clorox liquid bleach, was distributed by horse-drawn wagon to local breweries, dairies, and laundries for cleaning and disinfecting purposes.

A household-based liquid bleach product of 5% sodium hypochlorite instead of a 21% formula was used in 1916.

The Clorox Company creates products for the US market.

• Cleaning products: Laundry additives and home care products under the Clorox, Clorox2, Scentiva, Pine-Sol, Liquid-Plumr, Tilex, and Formula 409 brands as well as the CloroxPro and Clorox Healthcare brands.
• Professional food service products: Professional food service products include those under the Hidden Valley brand, including dressings, dips, seasonings, and sauces. 
• Vitamins, minerals and supplement products: Vitamins, minerals and supplemental products include RenewLife, Natural Vitality, NeoCell, and Rainbow Light brands. 
• Household products: Household products include cat litter products under the Fresh Step and Scoop Away brands, bags and wraps under the Glad brand and grilling products under the Kingsford charcoal brand. 
• Personal care products: Personal care products include those under the Burt's Bees brand. 
• Water filtration products: Water filtration products include those under the Brita brand. 

The following are produced in the international market.

• Laundry additives
• Home care products
• Water filtration systems
• Digestive health products
• Grilling products
• Cat litter 
• Food products
• Bags and wraps
• Natural personal care products

There are professional cleaning and disinfecting products under the Clorox, Ayudin, Clorinda, Poett, Pine-Sol, Glad, Brita, Renew Life and Ever Clean brands. The Clorox Company's products are sold through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drugstores, pet stores, third party channels and distributors. The company was founded in 1913.

TheDiluted net earnings per share increased 4% to 81 cents from 78 cents The year-ago quarter's adjusted earnings per share was 95 cents.

Pros and Cons of Investing in the Clorox Company

There are pros and cons to investing in the Clorox Company.

Pros

The Clorox Company has pros and cons.

• Dividends: The company's generous dividends are one of the bright, shiny reasons to invest in the Clorox Company. The company's dividend yield is 3.37% with a dividend increase track record beyond 50 years and has a current annual dividend of $4.72. The annual payout grew 428% over the last two decades and is both a Dividend King and a Dividend Aristocrat.
• Returns: The Clorox company has seemingly waited quite a long time to wake up and smell the coffee, and the pandemic provided the perfect opportunity. Revenues have increased by 19% over the last five years and free cash flows twirled upward like a tornado in 2020 but then touched back down to earth not long after the heights of the pandemic. 

Cons

There are drawbacks to investing in the stock. Let's look at the positives and negatives.

• May not have sufficient earnings: Clorox pays out 126.9% of its earnings in the form of dividends, which means that it may not have sufficient earnings to cover its dividend payment in the future. In comparison, Church & Dwight pays an annual dividend of $1.05 per share and has a dividend yield of 1.4%, showing a much more healthy dividend yield.
• Overvalued: The stock may be overvalued, meaning that it has a current price that is not justified by its earnings outlook, which the P/E ratio usually shows. The company may also be a poor pick for value investors and it may underperform the market in the future.
• Pandemic was its heyday: Are its best days behind the company? Today, Clorox's free cash flows have fallen 11% in five years and the stock has taken a considerable tumble since the height of the pandemic and just after.

Should You Tread Carefully with Clorox Corporation?

The Dividend King has seen some topsy-turvy changes over the last couple of years. The company has faced increased costs due to supply chain issues.

Before you make a decision on whether to invest in Clorox, you should know that the company has a history of challenging its peers. Over the past few years, dividends and stock price gains have increased.

There are 11 dividend stocks with high yields to learn more about.