The need to cleanse surfaces during the COVID-19 pandemic to meet health and safety standards drove plentiful revenue growth for companies like Clorox (CLX -1.38%), along with others offering household care items like Procter & Gamble (PG -1.15%).

With the drive to scrub everything constantly declining somewhat as the coronavirus slowly ebbs, Clorox still managed to post first-quarter (Q1) results ahead of expectations on Nov. 1. Investors may still wonder, however, which of these two soap and cleaner companies is the better future bet, and the results of each do indeed point to the potential winner.

Clorox -- better than expected, but still down

Clorox's stock rose more than 4% in after-hours trading on Nov. 1, as it reported Q1 fiscal 2022 revenue of $1.81 billion and delivered a 6.5% positive surprise above consensus analyst predictions. At the bottom line, its $1.21 of adjusted earnings per share (EPS) outpaced analyst forecasts by more than 18.6%. The report showed sales falling year over year for the new fiscal year's first quarter, which ended on Sept. 30, but apparently not as much as traders worried last week

A person wearing protective clothing and blue latex gloves spraying and scrubbing a surface with disinfectant.

Image source: Getty Images.

Slumping demand for disinfection products, currency issues, and cost inflation all fed into a 6% year-over-year drop in revenue from fiscal Q1 2021. Volume dropped 2% and organic sales slid 5% year over year. The company's adjusted EPS also decreased 54% and the net cash provided by operations, which registered a robust $383 million last year, plunged 89% to $41 million.

Its guidance calls for revenue to fall by 2% to 6% for the fiscal year, while adjusted EPS is expected to drop 21% to 26%, coming in somewhere between $5.40 and $5.70 EPS.

To explain investors' positive reaction to these metrics, a look at the two-year stack -- comparing fiscal Q1 2022's results to fiscal Q1 2020's results from the second half of pre-pandemic calendar 2019 -- reveals a 20.6% rise in revenue.

Adjusted EPS is down over the two-year stack, however, falling 23.9% from $1.59 to $1.21. This is likely due to gross margin falling from 48% to 37% in the most recent quarter, squeezed by rising costs caused by supply chain problems, raw material prices, increased labor expenses, and inflation.

Overall, then, Clorox's performance is slowing from last year's extraordinary highs, driven by the COVID-19 sanitizing frenzy, but it still shows significant sales growth over two years. While the bottom line shrank in the third quarter, this is due to cost pressure on margins rather than general failure of the company's business model.

The company isn't sitting idle in the face of the margin decline, however. It is working "to address these pressures head on through multiple levers, including our hallmark cost savings program and pricing actions," according to a statement by CEO Linda Rendle in the "Prepared Management Remarks" released alongside its Q3 report.

Clorox is bringing productivity increases online and raising prices, which it expects to cause positive margin growth by fourth-quarter fiscal 2022 (that is, April, May, and June of calendar 2022).

Once this occurs, earnings should rise. This should result in growth compared to the period before the extraordinary gains of 2020, not as strong as the pandemic period but still representing a long-term bullish trend.

Procter & Gamble -- wrestling with rising costs, but well diversified

While Procter & Gamble also has a finger in the cleaning products pie, it has a more diversified portfolio of products than Clorox. While Clorox has other segments too, including household (grilling supplies and cat litter) and lifestyle (personal care and water filters), these segments are smaller than the health and wellness segment, which is the cleaning product segment and which generated much of the two-year stack growth.

According to Procter & Gamble's late October Q1 fiscal 2022 earnings results, it is also facing rising costs, driven by the price of raw materials and soaring transportation expenses. These costs, however, have only reduced its gross margin by 4% rather than Clorox's 11% margin decline. Not only does this provide better earnings results currently, it means the company will return to margin growth sooner as it implements price increases and other countermeasures in the coming months.

The enterprise also managed to grow its quarterly revenue and earnings year over year, despite seeing explosive growth during 2020 as it, too, surged on the pandemic hygiene trend. Its revenue rose 5.3% year over year -- not as much as the 16% year-over-year growth in Q1 fiscal 2021 (calendar Q3 2020), but still showing its ability to maintain strong performance in the face of cleaning product demand drop-off.

Adjusted EPS dropped 1%, but again, this is much less than Clorox's 54% EPS plunge. It also maintained its previous full-year fiscal 2022 guidance, predicting 2% to 4% revenue growth, 2% to 4% organic sales growth, and 6% to 9% adjusted EPS growth.

P&G's relatively better performance compared to Clorox may come in part from its wider variety of products. Where Clorox is heavily focused on cleaning products, with a few additional segments in other household and personal care markets, Procter & Gamble has dozens of brands in multiple product categories.

According to its 2021 "P&G at a Glance" summary, 34% of sales come from "fabric and home care." This includes sanitizing products but also laundry detergent, dishwashing detergent, air fresheners, and laundry additives, none of which are likely to be positively or negatively affected by COVID-19 cleaning protocols. 25% of sales derive from feminine and baby care, 19% from beauty, and the rest from grooming and healthcare.

Thus, Procter & Gamble can benefit from the COVID-19 surge in surface cleaning products. But many other sectors providing robust sales and earnings make its performance less sensitive to decline in demand for these items, and helping it achieve positive year-over-year growth above even 2020's outstanding results.

The future looks potentially favorable to both Clorox and Procter & Gamble, with growth continuing despite cost headwinds. However, given Procter & Gamble's lower margin loss, its bigger assortment of product lines and corresponding lesser dependence on the COVID-driven cleaning products boom, and its continued year-over-year sales growth, it's probably the better choice if you're picking just one of these consumer staples stocks for investment.