Entrepreneurs

105-Year-Old Company Beats Market Sell-offs

(Photo by Drew Angerer/Getty Images)

Investors chasing after new technology companies have probably missed an old company that beats market sell-offs and has outperformed the S&P500 for several decades.

The company is Clorox. It rose 1.92% on Tuesday as technology stocks and the overall market sold off for the second time in five days. And over the long term, it has outperformed the S&P500 almost 2-1.

Company/Index 1-day Performance 5-dayPerformance Max-Performance
Clorox 1.92% -0.53% 3,996.81
S&P 500 -1.98 -3.77 2,387.09

Source: Yahoo.Finance.com 3/27/18

Clorox has been paying stockholders 2.40 percent in dividend, making it an attractive investment in a low-interest environment.

What explains Clorox’s solid market performance? A couple of things. First, there’s the nature of Clorox’s business. The company manufactures and distributes mostly cleaning and wellness products, items that people buy in good and bad times.

Then there’s corporate entrepreneurship— the leveraging of its core competencies to develop new products and become a diversified consumer and wellness products company. Once, the Electro-Alkaline Company (later renamed as Clorox Corporations) was making one product: liquid chlorine. Nowadays, the company still makes chorine, but that accounts for only 12% of its sales, with the remainder coming from new products like Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, and Tilex brands of water-filtration systems and filters under the Brita brand.

Clorox’s transformation from a chlorine producer more than one hundred years ago to a diversified consumer and wellness products company today has enhanced shareholder value nicely. The company has delivered better returns to its stockholders than competitor P&G (P&G acquired Clorox briefly back in 1950s, but was forced by regulators to divest it).

Company Revenue Operating Margin Return on Assets Return on Equity
Clorox $ 6.04B 18.21% 14.74% 155.15%
P&G $ 65.73B 22.95 7.74 18.79

Source: Yahoo.Finance.com 3/27/18

Company Revenue Operating Margin Return on Assets Return on Equity
Clorox $ 5.69B 18.88% 15.19% 274.32%
P&G $ 72.46B 21.56 7.36 14.51

Source: Finance.yahoo.com 5/27/16

While the past performance of a stock is never a guarantee for its future performance, it is a good indicator of Clorox’s ability to adapt to an ever-changing business environment and withstand market sell-offs.

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(Photo by Drew Angerer/Getty Images)

Investors chasing after new technology companies have probably missed an old company that beats market sell-offs and has outperformed the S&P500 for several decades.

The company is Clorox. It rose 1.92% on Tuesday as technology stocks and the overall market sold off for the second time in five days. And over the long term, it has outperformed the S&P500 almost 2-1.

Company/Index 1-day Performance 5-dayPerformance Max-Performance
Clorox 1.92% -0.53% 3,996.81
S&P 500 -1.98 -3.77 2,387.09

Source: Yahoo.Finance.com 3/27/18

Clorox has been paying stockholders 2.40 percent in dividend, making it an attractive investment in a low-interest environment.

What explains Clorox’s solid market performance? A couple of things. First, there’s the nature of Clorox’s business. The company manufactures and distributes mostly cleaning and wellness products, items that people buy in good and bad times.

Then there’s corporate entrepreneurship— the leveraging of its core competencies to develop new products and become a diversified consumer and wellness products company. Once, the Electro-Alkaline Company (later renamed as Clorox Corporations) was making one product: liquid chlorine. Nowadays, the company still makes chorine, but that accounts for only 12% of its sales, with the remainder coming from new products like Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, and Tilex brands of water-filtration systems and filters under the Brita brand.

Clorox’s transformation from a chlorine producer more than one hundred years ago to a diversified consumer and wellness products company today has enhanced shareholder value nicely. The company has delivered better returns to its stockholders than competitor P&G (P&G acquired Clorox briefly back in 1950s, but was forced by regulators to divest it).

Company Revenue Operating Margin Return on Assets Return on Equity
Clorox $ 6.04B 18.21% 14.74% 155.15%
P&G $ 65.73B 22.95 7.74 18.79

Source: Yahoo.Finance.com 3/27/18

Company Revenue Operating Margin Return on Assets Return on Equity
Clorox $ 5.69B 18.88% 15.19% 274.32%
P&G $ 72.46B 21.56 7.36 14.51

Source: Finance.yahoo.com 5/27/16

While the past performance of a stock is never a guarantee for its future performance, it is a good indicator of Clorox’s ability to adapt to an ever-changing business environment and withstand market sell-offs.

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