Clorox is reaffirmed as a buy: at $87 versus a $100 valuation based on slightly lowered cash-flow estimates, and 14.25x forward earnings, it looks undervalued on both forward P/E and discounted cash flow. Conviction is cut to low, as sales fell 5% and margins sit at 13.2% versus a normal 18-20%.

The fiscal year 2026 was extremely difficult for Clorox. Consumers have become more value-conscious and have begun to buy lesser-known products at cheaper prices. At the same time, Clorox's operating costs were increasing as a result of tariffs and the war in Iran.

Net sales fell by 5%, and profits declined even further. Adding to the concern, the CEO resigned for health reasons , and they are still looking for a replacement. So, does all this mean that investors should run away from Clorox, or is it a buying opportunity to seize the company when its price drops?

We can see Clorox's recent struggles reflected in its revenue chart. Of course, Clorox was one of the biggest winners during the pandemic as consumers flocked to its products, especially its disinfectant wipes.

Sales jumped from $6 billion to $7.5 billion . However, since then, the company has experienced difficulties. Sales fell from $7.5 billion to $6.7 billion. Things are likely to get worse before they get better.

When people go to stores and compare Clorox products with the store's own brands, they find lower prices for the latter, so they choose to replace the expensive products as an easy way to reduce household expenses.

This shift trend has continued, and I observe it in every company in this category, whether it's Clorox, Kimberly-Clark, or Procter & Gamble.

Not only are Clorox sales declining, but its profit margins are also declining . Its operating profit margin fell to 13.2% over the past twelve months. Even before the pandemic, the company was achieving operating profit margins closer to 18-20%, but now they are at 13%.

They are far below their normal operating levels.

Another area of concern is the decline in revenue per employee. It was approaching over 900,000, and has dropped to 800,000. Now, given all its struggles, I wouldn't be surprised if we saw an announcement of a major restructuring from Clorox followed by massive layoffs.

Overall, Clorox's stock fell by a double-digit percentage in 2026, while the broader S&P 500 index rose by more than 10%. To be more precise, Clorox stock fell by 13.4% and it was a very volatile year.

The year started well enough, with the stock price jumping to nearly $130 before dropping back to $80. In recent weeks, the price has rebounded to $87.

Based on market multiples, Clorox stock is trading at its lowest level in years. Based on the forward price-to-earnings ratio , Clorox stock is trading at 14.25, which is close to the cheapest price you could buy Clorox stock for in a while, so investor sentiment has turned negative as a result of the poor performance.

Most investors who own or are interested in the stock have been aware of its difficulties since the economic reopening. I have also revised my estimates for the company's future business.

In preparation for today's video, I took a look at my free cash flow estimates and lowered them slightly. Therefore, I now value the company at $100 per share, while the current market price is $87.

Therefore, the stock appears to be undervalued whether you look at it on a forward price-to-earnings basis or on a discounted cash flow basis . I have rated Clorox stock as a "buy" and the last update to this rating was on September 28, 2026.

Today, I will reaffirm my rating of the stock as a " buy".

However, I will lower my level of confidence and conviction. I used to have a moderate level of conviction and confidence that Clorox would be a good buying opportunity, but I have started to lose that confidence.

My confidence in this company is waning as the problems continue with no end in sight as to when things will improve. Therefore, I will lower my level of conviction and confidence to a low level.