The Clorox Company Earnings: Margins Keep Shrinking, but Net Income Increases

S&P 500 (NYSE:SPY) component The Clorox Company (NYSE:CLX) reported net income above Wall Street’s expectations for the second quarter. Clorox manufactures consumer products that are sold primarily through mass merchandisers, grocery stores, and other retail outlets.

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The Clorox Company Earnings Cheat Sheet for the Second Quarter

Results: Net income from continuing operations for the housewares and accessories company rose to $105 million (79 cents per share) vs. $95 million (68 cents per share) in the same quarter a year earlier.

Revenue: Rose 3.6% to $1.22 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: The Clorox Company beat the mean analyst estimate of 69 cents per share. Analysts were expecting revenue of $1.2 billion.

Quoting Management: “We delivered strong second-quarter results,” said Chairman and Chief Executive Officer Don Knauss. “We grew sales for the fourth consecutive quarter. Our U.S. categories continue to recover, and our market share remains healthy. While the economic climate remains challenging, our strategies are working and our people are executing well. I feel good about our plans for the remainder of the fiscal year.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.2 percentage point to 41.5% from the year earlier quarter. Over that time, margins have contracted on average 1.4 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 9 cents in the first quarter, by 10 cents in the fourth quarter of the last fiscal year, and by one cent in the third quarter of the last fiscal year.

The company’s revenue has now risen for two straight quarters. In the first quarter, revenue increased 3.1% to $1.3 billion from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from $1.10 a share to $1.09 over the last ninety days. For the fiscal year, the average estimate has moved down from $4.09 a share to $4.07 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com