The Clorox Company (CLX)

Return on sales

The profitability ratios of The Clorox Company from September 2020 through June 2025 reveal a noteworthy evolution characterized by initial declines followed by a significant recovery and consistent improvement.

Gross Profit Margin:
The gross profit margin started at approximately 46.56% in September 2020, maintaining a relatively stable level through December 2020 at 46.76%. However, a gradual decline ensued, reaching a low of 35.52% by September 2022. Subsequently, a consistent upward trend emerged, with margins increasing steadily over the following periods. By June 2025, the gross profit margin is projected to reach approximately 45.23%, indicating improved control over cost of goods sold and effective pricing strategies.

Operating Profit Margin:
Initially, the operating profit margin was around 20.29% in September 2020, displaying a downward trend that culminated in a low of 8.25% in September 2022. This decline suggests increased operating expenses or margin compression during this phase. From late 2022 onward, a marked recovery is observed, with the margin rising steadily to reach approximately 25.30% by June 2025. This indicates enhanced operational efficiency and cost management.

Pretax Margin:
The pretax margin exhibited a similar pattern, beginning at approximately 20.38% in September 2020, declining markedly to 4.52% in December 2021. The lowest point was 1.81% in March 2023. Subsequently, the margin improved substantially, reaching roughly 15.17% by June 2025, reflecting better pretax profitability driven by operational improvements and perhaps favorable non-operating items.

Net Profit Margin:
Net profit margin mirrors the trends observed in pretax margins, starting at 16.14% in September 2020 and decreasing sharply to a low of around 1.12% in December 2023. From that point, a consistent upward trend is evident, culminating in approximately 11.40% in June 2025. This indicates a substantial recovery and enhancement in bottom-line profitability, likely attributable to improved operational efficiencies, cost controls, and potential tax strategies.

Overall Trend Summary:
The analysis indicates that The Clorox Company experienced a period of profitability compression between 2020 and 2022, possibly due to increased costs, market pressures, or other macroeconomic factors. However, starting in late 2022, the company demonstrated a robust recovery across all profitability ratios. This uptick reflects successful implementation of strategic initiatives, improvement in operational efficiencies, and better margin management. Continuous positive momentum through mid-2025 suggests a favorable outlook for the company's profitability trajectory in the analyzed period.

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Return on investment

The Clorox Company's profitability ratios present a dynamic picture over the specified period, reflecting fluctuations in operational efficiency, asset utilization, and overall capital effectiveness.

Operating Return on Assets (Operating ROA):
The Operating ROA demonstrated a general upward trend from 21.35% on September 30, 2020, to a peak of 25.29% at the end of 2023. This ratio experienced notable improvements beginning in late 2023, escalating sharply to 30.27% by the end of 2024 and reaching 32.31% in mid-2025. The initial period showed some fluctuation, with lows around 9.44% in September 2022, indicating periods of reduced operating efficiency. Post-2023, the trend is markedly positive, signaling enhanced operational profitability relative to assets employed.

Return on Assets (ROA):
The ROA has been more volatile, with a nadir of 1.31% in March 2023, suggesting significantly poor overall asset utilization during that period, possibly due to operational challenges or extraordinary items. Prior to this, the ratio generally hovered below 10%, with some positive upticks, notably 12.59% in March 2025, indicating improved asset efficiency. The lowest point in early 2023 contrasts starkly with a moderate recovery thereafter, suggesting a period of operational strain followed by gradual improvement.

Return on Total Capital:
This ratio illustrates extraordinary variations, with values reaching exceptionally high levels. For example, on March 31, 2023, it spiked to an extraordinary 8,466.67%, indicating either a change in capital structure or an anomaly in financial reporting, such as extraordinary gains or leverage effects. While some fluctuations are attributable to the same factors, the overall trend from late 2023 to mid-2025 reflects a return to more typical albeit still elevated levels, with ratios around 152.74% to 508.79%. Notably, prior periods showed ratios often exceeding 100%, emphasizing intense capital efficiency or high leverage effects during those times.

Return on Equity (ROE):
The ROE demonstrates substantial volatility, with peaks reaching 2,533.33% in March 2023, an indication of extraordinary earnings relative to shareholders’ equity, likely driven by extraordinary items or leverage. Post-2023, the ratio has generally moderated to levels between approximately 68% and 595%, reflecting periods of both high and moderate profitability from the shareholders' perspective. The earlier years show robust margins, but the extremely high ratios during some quarters suggest anomalous or extraordinary gains rather than sustainable profitability levels.

Summary:
Overall, The Clorox Company's profitability metrics highlight periods of strong operational performance, especially in late 2023 and 2024, following a prior phase marked by declines and volatility. The ratios related to asset efficiency and capital returns suggest that the company has utilized its assets and capital resources effectively at certain times but has also experienced notable fluctuations, some of which may be influenced by extraordinary items or particular financial strategies. The recent trend indicates an improvement in profitability and asset utilization, potentially signaling a more stable or optimized operational environment moving forward.