Clorox (CLX) has taken a hit in 2025, down over 10% year-to-date, with most of that drop coming after the company released its second-quarter fiscal results. Investors have been on a bumpy ride with this household products giant, but there’s reason to believe the worst may be behind it. With a strong dividend history and a focus on efficiency, is this recent decline a chance to buy in?
Clorox’s Earnings Have Been a Roller Coaster
Over the past five years, Clorox has struggled to find steady footing. It saw a massive surge in demand during the early days of the pandemic, only to miscalculate how long that boost would last. As demand normalized, Clorox found itself dealing with supply chain disruptions, rising costs, and excess inventory.
On top of that, Clorox has been making costly changes to modernize its business. Back in 2021, the company launched a $560 million+ enterprise resource planning (ERP) overhaul to streamline operations. That investment is still ongoing. Meanwhile, Clorox also took major financial hits from an impairment charge in its supplements business, a pension settlement, and even a cyberattack that disrupted operations.
Despite all this, Clorox is showing signs of a turnaround. The company has been focused on expanding its gross margins for nine straight quarters and is aiming for organic sales growth of 3% to 5% in 2025.
Strong Dividend, But What About Growth?
Clorox has long been known as a reliable dividend stock. With a current yield of 3.3% and a track record of raising payouts for 40 consecutive years, it remains an attractive option for income-focused investors.
But dividends alone aren’t enough if the company isn’t growing. Clorox has made it clear that it’s prioritizing profitability over revenue expansion. The company is working on improving margins, which could eventually lead to more stable earnings growth.
Here’s a look at some key figures:
| Metric | Value |
|---|---|
| Market Cap | $18B |
| Gross Margin | 44.42% |
| Dividend Yield | 3.3% |
| 2025 EPS Guidance | $6.95 – $7.35 |
With an adjusted price-to-earnings ratio of around 20.4, Clorox isn’t dirt cheap, but it’s also not outrageously expensive.
Clorox’s Big Spending Strategy
Unlike companies that slash expenses to prop up earnings, Clorox is taking a different route. It’s actually spending more on advertising and operations to strengthen its core brands.
- Selling, general, and administrative (SG&A) expenses are expected to be 15% to 16% of net sales.
- Advertising and sales promotions will make up 11% to 11.5% of revenue.
That aggressive spending could help Clorox gain market share in its strongest product categories. However, it also puts pressure on the company to ensure that these investments pay off in the form of stronger operating margins.
Can Clorox Get Back to Pre-Pandemic Profitability?
One of the biggest concerns for investors is whether Clorox can return to the level of profitability it had before the pandemic.
The company has successfully improved its gross margins, but operating margins remain lower than they were a few years ago. Since even a small change in operating margin can make a big difference—each percentage point equals roughly $70 million in operating income—this is something to watch closely.
Clorox is betting that its ERP investment and higher advertising spend will lead to better efficiency and higher profits down the line. But it will need to prove that these efforts are more than just short-term fixes.
Should You Buy Clorox Stock?
For investors who believe in Clorox’s turnaround strategy, this dip in stock price could be an opportunity. The company is focusing on its strongest brands, cutting weaker segments, and making long-term investments in efficiency. If these moves work as planned, Clorox could emerge as a leaner, more profitable company.
The reliable dividend is also a nice cushion while waiting for the business to stabilize. But for those looking for strong revenue growth, Clorox might not be the best bet—at least not yet.
One thing is clear: Clorox’s turnaround isn’t over. But if management executes well, long-term investors could benefit from the company’s efforts to get back on track.
