The Clorox Company CLX is facing significant challenges, with its stock price plunging 12.1% over the past six months. This sharp fall has led to underperformance compared with the industry’s 1.4% growth, and the broader Zacks Consumer Staples sector’s dip of 2.5%. The downturn reflects a combination of broader market headwinds and specific issues within the company, raising concerns about its prospects.

CLX Stock's Price Performance in The Past Six Months

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Closing the trading session at $139.82 yesterday, CLX remains below its 200-day and 50-day SMAs of $152.40 and $143.99, respectively, indicating a possible sustained downward trend.

CLX Stock Trades Below 50 and 200-Day Moving Average

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CLX’s performance is weaker than that of its close competitors, including Colgate-Palmolive Company CL and The Procter & Gamble Company’s PG declines of 9.1% and 4.7%, respectively. The CLX stock also underperformed Church & Dwight Co., Inc‘s CHD growth of 1.3%.

These factors lead to a critical question for investors: Is Clorox facing a temporary setback, or do they point to deeper issues hurting the company's performance?

Here’s Why CLX Stock is Losing Momentum

Clorox continues to navigate a challenging macroeconomic landscape, facing headwinds from cost inflation, higher advertising expenses and the effects of ongoing inventory normalization. Strategic divestitures, including the sale of its Better Health Vitamins, Minerals & Supplements business and exit from Argentina, have also weighed on the company’s top-line performance.

In the second quarter of fiscal 2025, Clorox’s revenues and earnings surpassed the Zacks Consensus Estimate, but revenues still declined 15% year over year due to broad-based declines across key business segments. The company reported revenue declines of 13%, 11%, 16% and 12%, respectively, in the Health and Wellness, Household, Lifestyle and International segments, mainly due to volume contraction.

Looking ahead, management has provided a cautious outlook for fiscal 2025, projecting net sales growth between -1% and 2%. While gross margin growth is expected, this will likely be offset by cost inflation and increased trade promotional expenses. Clorox remains committed to brand investment, with advertising and sales promotion spending anticipated to be 11-11.5% of net sales. Additionally, selling and administrative expenses are forecasted at 15-16% of net sales, reflecting a 150-basis-point impact from strategic investments in digital transformation and productivity enhancements.

CLX’s Estimates: Is More Trouble on the Horizon?

The Zacks Consensus Estimate for Clorox’s earnings per share (EPS) for the current and upcoming fiscal years reflects mixed trends. For fiscal 2025, EPS is stable at $7.15 in the past 30 days, whereas for fiscal 2026, the earnings estimate has moved down 0.6% to $7.08 for the same period.

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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Can CLX’s Growth Efforts Ignite a Recovery?

Clorox is making strong strides under its IGNITE strategy, an integrated roadmap designed to accelerate profitable growth and position the company for long-term success. This strategy focuses on expanding key business elements and driving innovation across all segments, reinforcing its competitive advantage.

A major contributor to Clorox’s ongoing success is its streamlined operating model, which emphasizes efficiency and profitability. This model has delivered meaningful improvements in gross margin, reflecting the effectiveness of the company’s pricing strategies, cost-saving initiatives and comprehensive margin-management efforts.

As Clorox advances its transformation journey, the company remains focused on long-term value creation. In line with its strategic priorities, it recently completed the divestiture of its Better Health Vitamins, Minerals and Supplements business to Piping Rock Health Products. This move sharpens its focus on its core categories, reduces portfolio volatility and unlocks additional shareholder value.

Looking ahead, Clorox plans to invest $560-$580 million in transformative technologies over the next few years, including ERP replacement, transitioning to a cloud-based platform and digital transformation. About 70% of these costs are tied to ERP implementation, with the remainder for other enhancing technologies.

Additionally, Clorox is making solid progress in its International business, leveraging its Go Lean strategy to drive profitable growth. As part of the broader IGNITE strategy, the company is selectively investing in high-return international platforms and continues to explore targeted expansion opportunities to boost profitability and global presence.

Does CLX’s Valuation Discount Signal a Buying Opportunity?

Clorox is currently trading at a forward 12-month P/E ratio of 19.71, below the industry average of 20.2 and the S&P 500’s average of 20.05.

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CLX shares also trade at a discount to its competitors, including Colgate, Procter & Gamble, and Church & Dwight, with higher P/E multiples of 23.9x, 22.42x and 26.98x, respectively.

While the lower valuation might initially suggest an attractive entry point, it may also reflect investor concerns or potential underlying challenges within the business.

Investment Opinion on CLX Stock

Clorox has demonstrated strong brand positioning and market share gains. It remains focused on long-term growth through its streamlined operating model and IGNITE strategy, which aim to improve operational efficiency and expand margins. However, its recent stock decline, softening sales momentum, negative estimate revisions and bearish technical indicators suggest a cautious approach for new investors. Although Clorox’s discounted valuation may look attractive, analyzing the near-term headwinds is prudent before making an investment decision.

Clorox currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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