Fiscal 2009 sales grew 3% to $5.5 billion as price increases offset lower volumes, which has been a recurring theme in the industry: recent earnings reports from Energizer (NYSE:ENR) and Kimberly-Clark (NYSE:KMB) cited an ability to push through higher pricing to offset weaker volumes as consumers tighten their belts in a down economy. Excluding currency fluctuations and including the addition of Burt’s Bees sales from its recent acquisition, sales increased a respectable 4%.
Despite the challenging economic environment, Clorox was able to boost margins and keep other expenses in check. Advertising costs rose slightly as a result of the company’s work to build higher awareness of key brands, including its namesake bleach and cleaning products, Armor All auto-care products and Brita water filtration systems. Reported earnings came in at $3.81 per diluted share, with one-time restructuring charges and negative currency swings taking a bite out of the bottom line. Excluding these items, earnings would have been $4.12 per diluted share, or 14.4% from last year’s continuing earnings of $3.60. Operating cash flow grew about 1% to $738 million.
Clorox expects earnings for the coming year to come in at $4 – $4.15, or about flat from the just-completed year. Top-line growth should continue to be modest at 1-2%, including currency fluctuations of approximately 2%.
Despite the solid fourth-quarter and full-year results, shares of Clorox have traded down since the earnings release. This is probably due to overall market gains and more bullish sentiment, which is taking focus off of the majority of defensive consumer staples names. However, rival Church & Dwight (NYSE:CHD) received a boost from strong earnings, an increase in its full-year guidance and a dividend boost.
Given the recent stock price of $58, Clorox is trading at a forward P/E of just over 14. This is at the very low end of Clorox’s average P/E range over the past five years. Clorox also sports a 3.4% dividend yield, which means there is plenty of upside potential in the name over the next few years due to decent sales growth, expense controls and eventual currency benefits when the dollar’s rise reverses course. (To learn more, check out A Guide To Consumer Staples.)