The Clorox Company (NYSE:CLX), the largest manufacturer and marketer of bleach in the United States and the company behind brands such as Clorox, Tilex, Burt's Bees, and Glad, has scheduled its third-quarter earnings for release in the coming days. Let's take a look at its most recent earnings release and the expectations for the upcoming report to determine if we should initiate positions in its stock right now or if we should go with another consumer-products giant, like Church & Dwight (NYSE:CHD), instead.

Source: Clorox's Facebook

The most recent release
Back on Feb. 4, Clorox released its second-quarter report for fiscal 2014 and the results were mixed in comparison with expectations; here's a breakdown:

Earnings Per Share $0.88 $0.91
Revenue $1.33 billion $1.31 billion

Source: Benzinga

Clorox's earnings per share declined 5.4% and revenue increased 0.4% year-over-year, as global volume increased 1%. Clorox's cleaning products and international segments led the way during the quarter, showing growth in both sales and volume, while the lifestyle segment reported flat sales and a decrease in volume and the household segment showed negative growth on both lines.

Source: Glad

In terms of profitability, Clorox's gross profit decreased 1.1% to $557 million and the gross margin took a slight hit, declining 60 basis points to 41.9%; Clorox noted that these declines resulted from higher costs associated with commodities, manufacturing, logistics, and advertising. Even with increased costs, the company did note that it expects free cash flow to represent approximately 10% of its total revenue for the year, which will enable it to maintain its 3.2% dividend and possibly repurchase shares.

Overall, the second quarter was nothing to write home about and the stock reacted by falling 0.64% in the trading session that followed; however, the shares have rebounded in the months since and they now sit over 4.5% higher.

Expectations & what to watch for
Clorox's third-quarter results are due out before the market opens on May 1 and the current estimates call for growth on both the top and bottom lines; here's an overview:

MetricExpectedYear Ago
Earnings Per Share $1.08 $1.00
Revenue $1.43 billion $1.41 billion

Source: Estimize

These expectations call for Clorox's earnings per share to increase 8% and revenue to rise 1.4% from the year ago period; these would be much better results than what we saw in the second-quarter. Other than the key metrics, watch for three other important statistics and updates:

Source: Clorox

  1. It will be very important for Clorox to provide guidance for the fourth-quarter that is within or above analysts' expectations; the consensus estimates currently project earnings per share of $1.45 and revenue of $1.57 billion, which represent year-over-year increases of 5.1% and 1.3%, respectively. 
  2. While it provides its outlook on the fourth quarter, it will also be important for Clorox to maintain the full-year outlook it provided in its second-quarter report; this outlook projected earnings per share in the range of $4.40-$4.55 on revenue growth of 1%-2%.
  3. Keep an eye on Clorox's overall profitability and make sure it is doing everything possible to offset higher costs associated with commodities and operations. The company may have to raise prices in order to pass increased costs on to the consumer, but this will prevent further declines in its gross profit and gross margin.
I believe Clorox will meet analysts' earnings per share and revenue expectations while satisfying the three elements listed above, which will allow its shares to continue moving higher; for these reasons, I would be a buyer of Clorox and its safe 3.2% dividend will provide protection to the downside. 

The baking soda king 
On the same day of Clorox's report, Church & Dwight will release its first-quarter results for fiscal 2014. Church & Dwight is the leading producer of baking soda in the United States and the company behind brands such as Arm & Hammer, First Response, Trojan, and OxiClean. Here is what analysts currently expect it to accomplish in its earnings release:

MetricExpectedYear Ago
Earnings Per Share $0.73 $0.76
Revenue $783.9 million $779.3 million

Source: Estimize

These estimates project that Church & Dwight's earnings per share will decline 3.9% and revenue will increase 0.6% from the year-ago period; although these may seem like horrible numbers, Church & Dwight has stated that it expects the majority of its growth to take place in the second-half of the year, because it will be spending a substantial amount of cash to bring new products to the market in the first quarter.

Source: Wikipedia

With this being said, the increased spending should not have too much effect on the second quarter, so it will be important for Church & Dwight to provide guidance that is within expectations; the current analyst estimates see earnings per share of $0.68 and revenue of $811.8 million, which would be respective increases of 11.5% and 3.1% from the second quarter of 2013.

I believe Church & Dwight's product launches will be successful and they will drive higher-than-expected revenue growth, so the company will exceed analysts' expectations on both the top and bottom lines; therefore, I would be a buyer going into the report. When it comes to choosing between Clorox or Church & Dwight, I believe both represent great long-term growth opportunities paired with healthy dividends, so investors could simply pick either one.

The Foolish bottom line
Clorox is one of the largest players in the consumer products industry and it is scheduled to release its quarterly results in just a few days. The current estimates seem well within reach and I believe the company will surpass them, which will cause its stock to move back toward its 52-week high; it sits more than 8% below this level today. Foolish investors should strongly consider initiating positions in Clorox right now as this will allow both price appreciation and the company's high dividend to provide substantial returns in the years to come.