The Clorox CompanyCLXNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $187.10 per share(market-calibrated)

+59.3%

Upside to Fair Value

Current

$117.43

Pure Model

$198.98

Fair Value

$187.10

Bull Case

$237.52

Bear Case

$165.97

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $198.98.

What's Driving This Ratingfor CLX

↓

CapEx normalizing toward maintenance

Historical CapEx is 3.50% of revenue (heavy investment phase). Model fades this to 3.00% by Year 10, freeing up ~$44M in annual FCF. This is the biggest driver of long-term cash flow improvement.

→

Moderate revenue growth

Analyst consensus projects -8.41% revenue growth, fading to 2.50% by Year 10. Revenue reaches $8.9B (vs $7.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 65.82% indicates efficient cash generation. FCF reaches $1.3B by Year 10 (14.13% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.57

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.06%

Cost of Debt

Pre-tax Cost of Debt3.45%

Tax Rate23.56%

After-tax Cost of Debt2.64%

Equity Weight (E/V)83.43%

Debt Weight (D/V)16.57%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (83.43% × 7.06%) + (16.57% × 2.64%)

= 6.32%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.5B	$7.3B	$7.8B	$8.3B	$8.9B
EBIT	$1.2B	$1.3B	$1.4B	$1.5B	$1.6B
Tax	$281M	$313M	$338M	$357M	$384M
NOPAT	$910M	$1.0B	$1.1B	$1.2B	$1.2B
+ Depreciation	$206M	$230M	$249M	$262M	$282M
- Capex	$228M	$246M	$257M	$262M	$268M
- Δ NWC	-$6M	$3M	$2M	$2M	$2M
Free Cash Flow	$895M	$996M	$1.1B	$1.2B	$1.3B
Discount Factor	0.941	0.832	0.736	0.651	0.542
Present Value	$842M	$828M	$800M	$752M	$682M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.3B

Terminal Growth Rate2.50%

WACC6.32%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$33.8B

PV of Terminal Value$18.3B

Exit Multiple Method

Year 10 EBITDA$1.9B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$38.3B

PV of Terminal Value$20.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.8B

PV of Terminal Value$18.3B

Enterprise Value$26.1B

(-) Net Debt$2.7B

Equity Value$23.4B

Shares Outstanding124M

Price per Share$189.09

Exit Multiple Method

PV of Projected FCFs$7.8B

PV of Terminal Value$20.7B

Enterprise Value$28.5B

(-) Net Debt$2.7B

Equity Value$25.8B

Shares Outstanding124M

Price per Share$208.87

Pure Model Fair Value

$198.98

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.32%	$269.30	$295.84	$315.24	$301.76	$288.91
5.32%	$217.10	$229.68	$246.70	$271.06	$288.91
6.32%	$183.06	$190.10	$198.98	$210.53	$226.17
7.32%	$158.26	$162.61	$167.86	$174.33	$182.50
8.32%	$138.94	$141.81	$145.18	$149.19	$154.02

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$165.97

41.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.71

Base Case

$198.98

69.4% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.57

Bull Case

$237.52

102.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.48

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-8.41%

Year 3 Revenue Growth3.62%

Year 5 Revenue Growth2.72%

Year 7 Revenue Growth2.63%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin18.30%

Tax Rate23.56%

Historical Capex / Rev3.50%

Terminal Capex / Rev3.00%

NWC / Revenue1.03%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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