What happened
Clorox (CLX -0.44%) stock gained 10% through the first half of 2017, according to data provided by S&P Global Market Intelligence.
The rally sent shares to new all-time highs by late June.
So what
Investors cheered the company's fiscal second quarter report that in early February showed a 5% spike in sales growth thanks to record shipments of the company's disinfecting wipes. CEO Benno Dorer and his team took the opportunity to raise their full-year expansion outlook to between 3% and 4% from a previous range of 2% to 3%. The stock responded to the good news by rising over 14% that month.
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Clorox's next quarterly report kept the company right on track with its growth plans as a 7% spike in volume helped push overall sales higher by 4%. However, the consumer goods giant ramped up advertising spending and manufacturing costs, which drove gross margin down to 44% of sales from 45.3% a year ago.
Now what
Dorer and his team see the increased spending as simply a down payment on future growth. To that end, they are predicting expanding organic sales and adjusted profitability for the final quarter of their fiscal year.
Consensus estimates are targeting 3% sales growth and a 15% spike in earnings to $1.49 per share when Clorox announces its fourth-quarter operating results on Aug. 3. Besides the expanding top and bottom-line figures, investors will be looking for healthy cash flow to support the Dividend Aristocrat's growing dividend payout.
