Today's Perilous Reversal Stock: Clorox (CLX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Clorox ( CLX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Clorox as such a stock due to the following factors:

  • CLX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.1 million.
  • CLX has traded 69,144 shares today.
  • CLX is down 3% today.
  • CLX was up 7.4% yesterday.

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More details on CLX:

The Clorox Company manufactures and markets consumer and professional products worldwide. The company operates in four segments: Cleaning, Household, Lifestyle, and International. The stock currently has a dividend yield of 3.3%. CLX has a PE ratio of 21.1. Currently there is 1 analyst that rates Clorox a buy, 5 analysts rate it a sell, and 6 rate it a hold.

The average volume for Clorox has been 825,200 shares per day over the past 30 days. Clorox has a market cap of $11.6 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.56 and a short float of 9.5% with 8.11 days to cover. Shares are down 2.4% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Clorox as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $337.00 million or 16.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.55%.
  • 45.40% is the gross profit margin for CLOROX CO/DE which we consider to be strong. Regardless of CLX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.25% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • CLOROX CO/DE's earnings per share declined by 5.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CLOROX CO/DE reported lower earnings of $4.27 versus $4.32 in the prior year. This year, the market expects an improvement in earnings ($4.42 versus $4.27).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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