CLOROX CO /DE/ (CLX) stock intrinsic value fair value estimate & owner earnings analysis

Clorox makes and sells household and personal-care staples: Clorox bleach and cleaners, Pine-Sol, Glad bags and wraps, Brita, Kingsford, Hidden Valley, Fresh Step, Burt's Bees, and (since April 1, 2026) the Purell hand-hygiene brand through its GOJO acquisition. Walmart is about 26% of sales. Fiscal years end June 30. What happened in fiscal 2026: net sales fell 5% to $6.72 billion (organic sales down 8%, volume down 7%), gross margin fell from 45.2% to 42.3%, and net earnings fell to $601 million from $824 million. Management points to weak consumer spending, higher manufacturing and logistics costs, and retailers working down inventory they had bought early in fiscal 2025 ahead of the company's new ERP system. Two large transactions also changed the balance sheet: Clorox paid $476 million on March 2, 2026 to buy P&G's 20% interest in the Glad business, and paid about $2.15 billion for GOJO (about $0.8 billion of annual sales, $211 million of which is in fiscal 2026). Borrowings rose from about $2.5 billion to about $5.07 billion ($1.09 billion of commercial paper and other short-term notes, $3.98 billion of long-term notes), against $143 million of cash. How we measure earnings: we start from operating cash flow, remove year-to-year swings in receivables, inventory, payables and taxes, subtract stock compensation as a real cost, and subtract only the capital spending needed to stand still (about 3.4% of sales, roughly $207 million a year). The $476 million Glad buyout payment is treated as a one-time purchase of an outside owner's stake, not a recurring cost, and a one-time $114 million interest-rate hedge receipt in fiscal 2022 is excluded. Because debt is valued separately, we then add back cash interest paid to see what the business earns before its lenders. That cash flow per share was $5.44 (FY2017), $6.81, $6.43, $7.83, $7.98, $4.50, $4.93, $6.03, $7.95 and $6.85 (FY2026). Anchor: we use the median of the eight years excluding the fiscal 2020-2021 pandemic disinfectant surge, which gives $6.23 per share (about $760 million). Removing fiscal 2025, which was helped by the early retailer orders, would give $6.03; removing the $81 million deferred-tax timing benefit from fiscal 2026 would leave that year at about $6.19. The anchor holds either way. Cash flow per share fell 13.8% in fiscal 2026 ($7.95 to $6.85). Year 1 of the base case assumes zero growth from the $6.23 anchor, which is about 9% below fiscal 2026, so no rebound is assumed. We give no credit for growth: per-share cash flow averaged about $6.23 in fiscal 2017-2019 and about $6.05 in fiscal 2022-2026, so no growth is in evidence, and we do not count future buybacks, cost savings from the completed $580 million ERP investment, pricing, or GOJO growth because none is secured. GOJO: the company's pro forma disclosure implies GOJO earns roughly $60-100 million a year of cash before financing (about $80 million as a middle estimate, taken from unaudited pro forma figures we could not break down further). That is only about a 3.7% yield on the $2.15 billion price; at our 6% rate it is worth roughly $1.3 billion, about $7 per share less than was paid. Acquired customer relationships are amortized over 20 years, and that decay is carried in the bear case. Base case ($75.35 per share): the business is worth $114.82 per share (about $13.9 billion): $6.23 from the existing Clorox brands plus $0.66 from GOJO, held flat, because the brands have produced this level of cash through a pandemic spike, inflation and a volume slump. It owes $39.47 per share: $5.07 billion of borrowings less about $280 million because the long-term notes carry a 3.93% average rate, well below 6%. Difference: $75.35. Bear case ($42.32): the existing brands stay at the fiscal 2022-2023 level of $4.71 per share (actual results of $4.50 and $4.93, the two weakest years of the past decade), and GOJO delivers only its fiscal 2025 level ($0.50 per share), fading to zero over the 20-year life of its customer relationships. The business is worth $81.79 per share (about $9.9 billion), owes $39.47, difference $42.32. This case still generates about $630 million a year, well above the roughly $155 million of annual interest on the long-term notes plus commercial paper cost. Maturities of $901 million (fiscal 2028), $500 million (2029) and $501 million (2030) fall in this period; the credit agreements require EBITDA of at least four times interest, and the company was in compliance at June 30, 2026. Clorox has written off acquisitions before (fiscal 2023 impairments, the Better Health vitamins divestiture); those charges are non-cash and are added back, but repeated write-offs argue for caution on the GOJO deal. Bull case ($103.99): the existing brands return to about $7.80 per share, the $7.8-$8.0 range reached in fiscal 2025 (45.2% gross margin) and in the pandemic years, and GOJO delivers its annualized fiscal 2026 level of about $98 million ($0.81 per share), both flat. The business is worth $143.47 per share (about $17.4 billion), owes $39.47, difference $103.99. Since our previous analysis (base $79.30, bear $21.60, bull $159.20): borrowings have roughly doubled with GOJO and the Glad buyout, and this analysis charges them explicitly. We now discount at a flat 6% rather than 8-9% and give no credit for growth or management targets. Bear rises because it is built from results the company actually posted, and bull falls because it no longer credits growth. What could make this wrong: if volumes keep falling beyond fiscal 2026 and gross margin does not recover, results move toward the bear case; heavy Walmart concentration and the GOJO integration are the main named risks.