Clorox

Methodology

Clorox's household cleaning and consumer products portfolio provides defensive earnings from essential categories, though the company faces challenges from private label and changing consumer preferences. The pandemic created temporary boosts that normalized, while cyber-attacks and commodity inflation created more recent headwinds. This calculation works moderately for Clorox, though the mature brand portfolio's limited organic growth and execution challenges require realistic normalized growth assumptions.

Methodology

Clorox's PEG ratio often appears elevated given low single-digit or flat organic growth in mature cleaning and household categories. The company's defensive characteristics justify some premium, but limited innovation and market share pressures constrain growth. For mature consumer staples like Clorox facing secular headwinds, free cash flow generation and brand defense matter more than growth-based PEG multiples.

Methodology

Clorox's dividend yield (typically 2.5-3.5%) becomes central to the investment thesis given limited growth prospects in mature household products. The company's 45+ year history of dividend increases appeals to income investors, though recent challenges have pressured the payout ratio. PEGY is essential for valuing Clorox, where the dividend provides most of the total return given the low-growth nature of mature cleaning brands facing competitive and commodity pressures.