Intrinsic value of Clorox Company (The) - CLX

Previous Close

$155.49

  Intrinsic Value

$78.05

stock screener

  Rating & Target

sell

-50%

Previous close

$155.49

 
Intrinsic value

$78.05

 
Up/down potential

-50%

 
Rating

sell

We calculate the intrinsic value of CLX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  6,369
  6,630
  6,908
  7,203
  7,516
  7,847
  8,198
  8,569
  8,960
  9,373
  9,809
  10,269
  10,754
  11,264
  11,801
  12,367
  12,962
  13,589
  14,248
  14,941
  15,670
  16,436
  17,242
  18,089
  18,979
  19,914
  20,897
  21,930
  23,015
  24,155
Variable operating expenses, $m
  5,161
  5,363
  5,577
  5,804
  6,045
  6,301
  6,571
  6,857
  7,158
  7,477
  7,560
  7,914
  8,287
  8,681
  9,095
  9,531
  9,990
  10,473
  10,981
  11,515
  12,076
  12,667
  13,288
  13,941
  14,627
  15,347
  16,105
  16,901
  17,737
  18,615
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  5,161
  5,363
  5,577
  5,804
  6,045
  6,301
  6,571
  6,857
  7,158
  7,477
  7,560
  7,914
  8,287
  8,681
  9,095
  9,531
  9,990
  10,473
  10,981
  11,515
  12,076
  12,667
  13,288
  13,941
  14,627
  15,347
  16,105
  16,901
  17,737
  18,615
Operating income, $m
  1,207
  1,267
  1,331
  1,399
  1,470
  1,546
  1,627
  1,712
  1,802
  1,896
  2,250
  2,355
  2,466
  2,583
  2,706
  2,836
  2,973
  3,116
  3,267
  3,426
  3,594
  3,769
  3,954
  4,148
  4,352
  4,567
  4,792
  5,029
  5,278
  5,539
EBITDA, $m
  1,573
  1,638
  1,706
  1,779
  1,856
  1,938
  2,025
  2,116
  2,213
  2,315
  2,423
  2,536
  2,656
  2,782
  2,915
  3,054
  3,202
  3,356
  3,519
  3,690
  3,870
  4,060
  4,259
  4,468
  4,688
  4,919
  5,161
  5,416
  5,684
  5,966
Interest expense (income), $m
  78
  134
  144
  154
  164
  176
  187
  200
  214
  228
  243
  259
  275
  293
  311
  331
  351
  373
  396
  420
  445
  471
  499
  529
  559
  592
  626
  662
  699
  739
  780
Earnings before tax, $m
  1,073
  1,124
  1,177
  1,234
  1,295
  1,359
  1,427
  1,498
  1,574
  1,654
  1,991
  2,080
  2,173
  2,272
  2,376
  2,485
  2,600
  2,721
  2,848
  2,981
  3,122
  3,270
  3,425
  3,589
  3,761
  3,941
  4,131
  4,330
  4,539
  4,759
Tax expense, $m
  290
  303
  318
  333
  350
  367
  385
  405
  425
  447
  538
  562
  587
  613
  641
  671
  702
  735
  769
  805
  843
  883
  925
  969
  1,015
  1,064
  1,115
  1,169
  1,226
  1,285
Net income, $m
  784
  820
  860
  901
  945
  992
  1,042
  1,094
  1,149
  1,207
  1,453
  1,518
  1,587
  1,658
  1,734
  1,814
  1,898
  1,986
  2,079
  2,176
  2,279
  2,387
  2,501
  2,620
  2,745
  2,877
  3,015
  3,161
  3,314
  3,474

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,264
  5,479
  5,709
  5,953
  6,211
  6,485
  6,775
  7,081
  7,405
  7,747
  8,107
  8,487
  8,887
  9,309
  9,753
  10,221
  10,713
  11,231
  11,775
  12,348
  12,951
  13,584
  14,250
  14,950
  15,685
  16,458
  17,270
  18,124
  19,021
  19,963
Adjusted assets (=assets-cash), $m
  5,264
  5,479
  5,709
  5,953
  6,211
  6,485
  6,775
  7,081
  7,405
  7,747
  8,107
  8,487
  8,887
  9,309
  9,753
  10,221
  10,713
  11,231
  11,775
  12,348
  12,951
  13,584
  14,250
  14,950
  15,685
  16,458
  17,270
  18,124
  19,021
  19,963
Revenue / Adjusted assets
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
Average production assets, $m
  2,159
  2,248
  2,342
  2,442
  2,548
  2,660
  2,779
  2,905
  3,037
  3,178
  3,325
  3,481
  3,645
  3,818
  4,001
  4,192
  4,394
  4,607
  4,830
  5,065
  5,312
  5,572
  5,845
  6,132
  6,434
  6,751
  7,084
  7,434
  7,802
  8,188
Working capital, $m
  185
  192
  200
  209
  218
  228
  238
  248
  260
  272
  284
  298
  312
  327
  342
  359
  376
  394
  413
  433
  454
  477
  500
  525
  550
  578
  606
  636
  667
  700
Total debt, $m
  2,660
  2,845
  3,042
  3,251
  3,472
  3,707
  3,955
  4,218
  4,495
  4,788
  5,097
  5,422
  5,765
  6,127
  6,507
  6,908
  7,330
  7,774
  8,240
  8,731
  9,248
  9,790
  10,361
  10,961
  11,591
  12,254
  12,950
  13,681
  14,450
  15,257
Total liabilities, $m
  4,511
  4,696
  4,893
  5,102
  5,323
  5,558
  5,806
  6,069
  6,346
  6,639
  6,948
  7,273
  7,616
  7,978
  8,358
  8,759
  9,181
  9,625
  10,091
  10,582
  11,099
  11,641
  12,212
  12,812
  13,442
  14,105
  14,801
  15,532
  16,301
  17,108
Total equity, $m
  753
  784
  816
  851
  888
  927
  969
  1,013
  1,059
  1,108
  1,159
  1,214
  1,271
  1,331
  1,395
  1,462
  1,532
  1,606
  1,684
  1,766
  1,852
  1,942
  2,038
  2,138
  2,243
  2,354
  2,470
  2,592
  2,720
  2,855
Total liabilities and equity, $m
  5,264
  5,480
  5,709
  5,953
  6,211
  6,485
  6,775
  7,082
  7,405
  7,747
  8,107
  8,487
  8,887
  9,309
  9,753
  10,221
  10,713
  11,231
  11,775
  12,348
  12,951
  13,583
  14,250
  14,950
  15,685
  16,459
  17,271
  18,124
  19,021
  19,963
Debt-to-equity ratio
  3.530
  3.630
  3.730
  3.820
  3.910
  4.000
  4.080
  4.170
  4.250
  4.320
  4.400
  4.470
  4.540
  4.600
  4.670
  4.730
  4.780
  4.840
  4.890
  4.940
  4.990
  5.040
  5.080
  5.130
  5.170
  5.210
  5.240
  5.280
  5.310
  5.340
Adjusted equity ratio
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  784
  820
  860
  901
  945
  992
  1,042
  1,094
  1,149
  1,207
  1,453
  1,518
  1,587
  1,658
  1,734
  1,814
  1,898
  1,986
  2,079
  2,176
  2,279
  2,387
  2,501
  2,620
  2,745
  2,877
  3,015
  3,161
  3,314
  3,474
Depreciation, amort., depletion, $m
  366
  370
  375
  380
  386
  392
  398
  404
  411
  419
  173
  181
  190
  199
  208
  218
  229
  240
  252
  264
  277
  290
  304
  319
  335
  352
  369
  387
  406
  426
Funds from operations, $m
  1,149
  1,190
  1,235
  1,281
  1,331
  1,384
  1,439
  1,498
  1,560
  1,626
  1,627
  1,700
  1,776
  1,857
  1,943
  2,032
  2,127
  2,226
  2,330
  2,440
  2,556
  2,677
  2,805
  2,939
  3,080
  3,229
  3,384
  3,548
  3,720
  3,901
Change in working capital, $m
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  31
  33
Cash from operations, $m
  1,142
  1,183
  1,227
  1,273
  1,322
  1,374
  1,429
  1,487
  1,549
  1,614
  1,614
  1,686
  1,762
  1,842
  1,927
  2,016
  2,109
  2,208
  2,311
  2,420
  2,535
  2,655
  2,782
  2,915
  3,054
  3,201
  3,356
  3,518
  3,689
  3,868
Maintenance CAPEX, $m
  -108
  -112
  -117
  -122
  -127
  -133
  -139
  -145
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -208
  -218
  -229
  -240
  -252
  -264
  -277
  -290
  -304
  -319
  -335
  -352
  -369
  -387
  -406
New CAPEX, $m
  -83
  -89
  -94
  -100
  -106
  -112
  -119
  -126
  -133
  -140
  -148
  -156
  -164
  -173
  -182
  -192
  -202
  -212
  -223
  -235
  -247
  -260
  -273
  -287
  -302
  -317
  -333
  -350
  -368
  -386
Cash from investing activities, $m
  -191
  -201
  -211
  -222
  -233
  -245
  -258
  -271
  -284
  -298
  -313
  -329
  -345
  -363
  -381
  -400
  -420
  -441
  -463
  -487
  -511
  -537
  -563
  -591
  -621
  -652
  -685
  -719
  -755
  -792
Free cash flow, $m
  951
  982
  1,015
  1,051
  1,089
  1,129
  1,172
  1,217
  1,265
  1,316
  1,301
  1,357
  1,417
  1,480
  1,546
  1,616
  1,689
  1,767
  1,848
  1,934
  2,024
  2,119
  2,218
  2,323
  2,433
  2,549
  2,671
  2,799
  2,933
  3,075
Issuance/(repayment) of debt, $m
  177
  185
  197
  209
  222
  235
  248
  263
  277
  293
  309
  326
  343
  361
  381
  401
  422
  444
  467
  491
  516
  543
  571
  600
  630
  662
  696
  731
  768
  807
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  177
  185
  197
  209
  222
  235
  248
  263
  277
  293
  309
  326
  343
  361
  381
  401
  422
  444
  467
  491
  516
  543
  571
  600
  630
  662
  696
  731
  768
  807
Total cash flow (excl. dividends), $m
  1,128
  1,167
  1,212
  1,260
  1,310
  1,364
  1,420
  1,480
  1,542
  1,608
  1,610
  1,683
  1,760
  1,841
  1,926
  2,016
  2,111
  2,210
  2,315
  2,425
  2,540
  2,661
  2,789
  2,923
  3,064
  3,212
  3,367
  3,530
  3,702
  3,882
Retained Cash Flow (-), $m
  -27
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -64
  -67
  -70
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -111
  -116
  -122
  -128
  -135
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,101
  1,136
  1,179
  1,225
  1,273
  1,325
  1,379
  1,436
  1,496
  1,559
  1,558
  1,628
  1,703
  1,781
  1,863
  1,949
  2,040
  2,136
  2,237
  2,343
  2,454
  2,571
  2,694
  2,823
  2,959
  3,101
  3,251
  3,408
  3,574
  3,747
Discount rate, %
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
  1,021
  971
  921
  867
  810
  750
  687
  624
  561
  498
  418
  362
  310
  261
  216
  176
  141
  111
  85
  64
  47
  34
  24
  16
  11
  7
  4
  3
  2
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Clorox Company is a manufacturer and marketer of consumer and professional products. The Company sells its products primarily through mass retail outlets, e-commerce channels, wholesale distributors and medical supply distributors. The Company operates through four segments: Cleaning, Household, Lifestyle and International. Its Cleaning segment consists of laundry, home care and professional products marketed and sold in the United States. Its Household segment consists of charcoal, cat litter and plastic bags, wraps and container products marketed and sold in the United States. Its Lifestyle segment consists of food products, water-filtration systems and filters, and natural personal care products marketed and sold in the United States. Its International segment consists of products sold outside the United States. It markets some of the consumer brand names, such as namesake bleach and cleaning products, Pine-Sol cleaners, Liquid-Plumr clog removers and Kingsford charcoal.

FINANCIAL RATIOS  of  Clorox Company (The) (CLX)

Valuation Ratios
P/E Ratio 28.6
Price to Sales 3.4
Price to Book 37
Price to Tangible Book
Price to Cash Flow 23.1
Price to Free Cash Flow 31.5
Growth Rates
Sales Growth Rate 3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 34.3%
Cap. Spend. - 3 Yr. Gr. Rate 10.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 256.6%
Total Debt to Equity 405%
Interest Coverage 14
Management Effectiveness
Return On Assets 16.6%
Ret/ On Assets - 3 Yr. Avg. 16%
Return On Total Capital 26.2%
Ret/ On T. Cap. - 3 Yr. Avg. 25.6%
Return On Equity 167.1%
Return On Equity - 3 Yr. Avg. 302%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 44.7%
Gross Margin - 3 Yr. Avg. 44.5%
EBITDA Margin 21.3%
EBITDA Margin - 3 Yr. Avg. 21.2%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 16.9%
Pre-Tax Margin 17.3%
Pre-Tax Margin - 3 Yr. Avg. 16.9%
Net Profit Margin 11.7%
Net Profit Margin - 3 Yr. Avg. 11.1%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 33.4%
Payout Ratio 58.8%

CLX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLX stock intrinsic value calculation we used $6124 million for the last fiscal year's total revenue generated by Clorox Company (The). The default revenue input number comes from 0001 income statement of Clorox Company (The). You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CLX stock valuation model: a) initial revenue growth rate of 4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for CLX is calculated based on our internal credit rating of Clorox Company (The), is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Clorox Company (The).
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CLX stock the variable cost ratio is equal to 81.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CLX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Clorox Company (The).

Corporate tax rate of 27% is the nominal tax rate for Clorox Company (The). In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CLX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CLX are equal to 33.9%.

Life of production assets of 19.2 years is the average useful life of capital assets used in Clorox Company (The) operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CLX is equal to 2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $726 million for Clorox Company (The) - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 128.151 million for Clorox Company (The) is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Clorox Company (The) at the current share price and the inputted number of shares is $19.9 billion.

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