Clorox (CLX)

Total return at 5 years: 15.6%/year = 10.9% appreciation + 4.7% dividend. The target price ($156) is ex-dividend; the $27 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $217 · Multiples $148) exceeds the market price ($93).

Today — fairly valued: at $93 trades ~37.3% below its value discounted to today (~$148); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Muy infravalorado: the target price ($156) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$95.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($93) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-10.2%/year) than we project (8.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.5 bn of owner earnings in year 5 (vs ~$1.2 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on Utilidad neta comparable (P/E). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Year 0 is the TTM = FY2026 (close on Jun 30, 2026), the last fiscal year in the 10-K filed on Aug 7, 2026, already incorporating the earnings and guidance 8-K (Aug 3, 2026). FY2026 was a transition year: the acquisition of GOJO Industries (Purell) for ~$2.15bn closed on Apr 1, 2026, financed mostly with new debt, and the purchase of the remaining 20% of Glad from P&G for $476M was executed after the joint-venture agreement expired, on top of completing the U.S. ERP implementation, whose shipping disruption depressed the year's sales and earnings. The revenue path starts from the company's own guidance for FY2027: GAAP net sales +13% to +14% (midpoint 13.5%), which include ~9.5 points from a full year of GOJO consolidation (versus only April-June in FY2026); guided organic sales are +3.5% to +4.5%, of which more than 3.5 points are the rebound from leaving behind the FY2026 ERP inventory drawdown (in other words, underlying organic growth, net of that calendar effect, is around 0-1%). That is why year-1 growth (13.5%) drops sharply in year 2 (7.0%) and keeps decaying smoothly toward ~3% by year 5: it is the mechanical, company-quantified reversal of the GOJO consolidation effect (stated here so the step-down is not read as baked-in conservatism or as noise in the path). Net margin also compresses in year 1 (from 10.05% TTM to 9.27%) because adjusted EPS guidance ($5.70-6.00, +3% to +8.5%) grows considerably less than sales: GOJO enters with lower initial margin (inventory step-up from the purchase and integration costs) and only gradually recovers toward year 5 (11.0%). The model's tax rate uses FY2027 guidance (~23%). Capex and depreciation rise from FY2026 due to amortization of intangibles acquired in the GOJO purchase (an analyst estimate of the magnitude, not a figure cited from the 10-K). Metric-level convention: 'ownerEarnings' here is comparable (non-GAAP) net income — a classic P/E on earnings already after interest — so the common block's cajaStart and deuda fields remain at 0 (funding is already captured in earnings) and the piece's bridge does not subtract debt or add cash again, to avoid double counting: the same criterion as the library's other consumer staples companies (Coca-Cola). Excess cash is imputed via explicit buybacks (sharesPath), never via cash accumulation: Clorox returns nearly all of its normalized free cash flow (~$0.881bn, excluding the Glad payment) as dividends ($0.602bn) plus buybacks ($0.254bn), a payout near 100% of the flow, consistent with the stated priority of deleveraging after the GOJO acquisition. The net share reduction rate (~1%/year) comes from the revealed reduction in diluted shares over the last two fiscal years (124.80M to 122.13M, ~-1.08%/year compounded) and is the same across all three scenarios, as the method requires: scenarios vary the business, not the capital-return policy. The terminal exit multiple (Base 18x) sits in the low-mid part of the [16,22] band for the consumer staples archetype: return on capital (~17.7% NOPAT/invested capital) is comfortably above the 10% bar, but terminal growth (~3%) is low and the moat was rated narrow and stable, with no evidence of a widening gap.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $156 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $93, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $156 in 5 years plus $27 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $148. Against the current market price ($93), the margin of safety is 37.3% (trades below the maximum → there is margin) and the total return at that price would be 15.6% annually.

• Entry multiple. 17× TTM adjusted earnings, close to the floor of the consumer staples band (16-22x).
• Decline from the high. 27% below the 52-week high, without reaching the crash-alert threshold (35%).
• Dividend yield. Current yield of ~5.4% on the market price, with modest expected growth (~2%/year).

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (137%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital. ROIC ~17.7% on invested capital (equity plus debt minus cash), comfortably above the 10% bar.
• Cash generation. Normalized cash flow ~$0.881bn ex the Glad payment; the reported figure ($612M) is depressed by that one-time payment.
• Reinvestment runway. Capex is almost entirely maintenance (~3% of sales); growth is bought mostly via M&A (GOJO), not via organic capex.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Clorox's growth breaks down into volume x price/mix by segment, plus the one-time effect of GOJO consolidation. In the fourth quarter of FY2026, Health and Wellness added 10 points of volume and 6 of price/mix (helped by GOJO), while Household and Lifestyle lost volume (-16 and -14 points respectively) with price/mix also negative, reflecting both the ERP lapping and private-label pressure. The company does not report a backlog- or contract-type operating driver: its sales are transactional, retailer by retailer.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Underlying organic growth. Net of the ERP calendar effect, underlying organic growth is around 0-1%, weak for a consumer staple.
• GOJO tailwind. A full year of consolidation contributes ~9.5 points of GAAP growth in FY2027, with unquantified B2B synergy potential.
• Guidance visibility. The company guides FY2027 sales and EPS within relatively narrow ranges, providing near-term visibility after a disruptive year.

• Brand position. More than 80% of sales from No. 1 or No. 2 category brands (company's own filing data).
• Channel concentration. Walmart is 26% of sales and the top five customers, half; gives the retailer bargaining power.
• Category diversification. Four segments with brands across cleaning, hygiene, household, personal care and pet products.
• Private-label pressure. Growing competition from lower-priced private-label brands in clubs, supermarkets and drugstores.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net cash $0 bn
• !Interest coverage (EBIT / interest)7.5x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 137% of ROIC
• ✓Value creation (ROIC − 10% bar)+8pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.8x — no over-investment
• ✓Float / working capitalFrees up cash $0.1 bn (float / negative WC)
• ✓Dilution (SBC % of revenue + shares)SBC 0.7% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Total debt ~$3.98bn after financing GOJO and the Glad purchase mostly with new debt.
• Credit rating. S&P downgraded the rating from BBB+ to BBB in February 2026.
• Cash coverage. Available cash of only $143M against the debt; the company stated a priority of deleveraging with operating cash flow.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Leadership continuity. CEO Linda Rendle announced her resignation in May 2026 with no successor named as of the filing date.
• Recent capital allocation. GOJO and the Glad purchase, financed mostly with debt, increased leverage and prompted a rating downgrade.
• Capital return discipline. Sustained and growing dividend (13 consecutive years of increases through FY2026) alongside moderate buybacks.

• motivated sellers: adjusted EPS down 28% year over year due to quantified transition items (post-ERP inventory drawdown, GOJO integration costs), which the market punishes as if it were structural business deterioration
• motivated sellers: one-time charges and the Glad purchase ($476M) depressed reported operating cash flow ($612M vs $981M in FY2025), though the normalized flow (excluding that payment) was ~$881M
• missing buyers: uncertainty over CEO succession, announced in May 2026 without resolution, which may keep buyers on the sidelines until it is settled

Both sources are verifiable in the filing itself and in guidance: the ERP calendar effects and GOJO integration costs are quantified by the company (points of growth, cents of EPS), and FY2027 guidance already anticipates their partial reversal. There is no evidence of structural market share loss in Item 1 or in the filing's risk factors beyond the generic private-label pressure facing the whole sector.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +8%/year (+44% total): the margin of safety protects the downside. The bull (+22%/year, +169% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• CEO succession. No successor named as of the filing date, amid a complex integration.
• GOJO integration. Risk of B2B/consumer channel conflict and of unanticipated costs or regulatory obligations.
• Recurring systems disruption. The ERP transition already affected results over two consecutive fiscal years.
• Input and logistics costs. Gross margin compressed 520 basis points in the quarter due to higher manufacturing and logistics costs.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A narrow moat and ROIC 18% above the 10% bar, but the margin is limited (+37%) → excellent business at a fair price.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 8% at a PEG of 2.1 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 8% (EBIT/EV) + ROIC 18% → makes the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -10% vs our 8%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +2%/yr, bull-scenario ceiling +18%/yr over 5y → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: intangibles, efficient scale → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -10%, within what we project (8%) — the story squares with the numbers.