The company’s quarterly earnings of $1.44 per share from continuing operations increased 11% year over year. Excluding the impact of sale of assets, quarterly earnings jumped 6.2% to $1.38 per share. Further, the bottom line surpassed the Zacks Consensus Estimate of $1.36.

The Clorox Company - Earnings Surprise | FindTheBest

Earnings benefited from enhanced sales and gross margin, partly offset by higher selling & administrative expenses.

Net sales advanced nearly 4% to $1,557 million, primarily driven by increased prices and robust volumes, partially offset by unfavorable currency effects. On a currency neutral basis, revenues increased 6% in the reported quarter. Moreover, sales of this Zacks Rank #2 (Buy) company outpaced the Zacks Consensus Estimate of $1,520 million.

During the quarter, volumes inched up 3%, aided by strength in the Cleaning, Household and International segments.

Backed by efficient cost savings, lower commodity costs and better pricing, partly offset by greater manufacturing and logistics expenses, Clorox’s gross margin expanded 270 basis points (bps) to 45.6% in the quarter.

Revenue by Segment

Sales in the Cleaning segment improved 9% to $465 million, with a 7% increase in volumes. Volumes mainly benefited from strength witnessed in Home Care and Professional Products.

Household sales increased 4% to $580 million, with a 2% jump in volume, mainly aided by solid gains in Bags and Wraps.

Sales and volumes at the Lifestyle segment remained flat year over year, as greater shipments in Natural Personal Care were offset by weakness in Dressings and Sauces, and Water Filtration. Segment sales came in at $245 million.  

In the International business segment, Clorox’s sales remained flat, at $267 million, reflecting negative currency impact. On a currency-neutral basis, sales increased 11% year over year. However, volumes were up 2% backed by gains in Latin America and Canada, somewhat offset by lower shipments in Europe.

Financials
 

Clorox ended fiscal 2015 with cash and cash equivalents of $382 million and long-term debt of $1,796 million. During the fiscal, the company generated $858 million of net cash from continuing operations compared with $786 million a year ago.

Also, Clorox repurchased 4 million shares worth $434 million during the fiscal. In line with its practice of boosting shareholder value, Clorox raised its quarterly dividend by 4% to 77 cents a share during the fourth quarter.

Clorox’s debt to EBITDA ratio stood at 1.8 at the end of fiscal 2015, lower than its 2.0–2.5 target range.

Guidance

Despite facing a tough macro environment, management remains impressed with its cost-savings and demand creation strategies, which enabled the company to achieve sales growth in each quarter of fiscal 2015. This also helped Clorox to achieve better productivity and improved margins.

Following the spectacular results and the factors driving the same, the company issued its outlook for fiscal 2016. Though management is confident of its core business strategies, it expects fiscal 2016 to bear the brunt of adverse currency fluctuations and sluggish global economies.   

Consequently, Clorox expects fiscal 2016 sales growth in a range of flat to a 1% increase. On a currency neutral basis, sales growth is anticipated to range from 3%–4%.

EBIT margin is envisioned to expand in a band of 25–50 bps. The effective tax rate for the fiscal is estimated to be 34%–35%.

Consequently, the company expects fiscal 2016 earnings to range from $4.68–$4.83 per share.

Other Stocks to Consider

Other well-ranked stocks in the consumer staples sector include Newell Rubbermaid Inc. (NWL - Analyst Report), Kimberly-Clark Corporation (KMB - Analyst Report) and Campbell Soup Company (CPB - Analyst Report), each carrying a Zacks Rank #2.