Why Clorox Stock Sank Today

Clorox (NYSE: CLX) stock lost ground in Tuesday's trading following the company's recent quarterly report. The company's share price closed out the day down 2.4% and had been down as much as 6.3% earlier in the session.

After market close yesterday, Clorox released results for the third quarter of its current fiscal year, which concluded at the end of March. The company reported sales and earnings that fell short of Wall Street's expectations and guided for significant performance headwinds in the near term.

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Clorox stock sinks on big fiscal Q3 misses

Clorox posted non-GAAP (generally accepted accounting principles) adjusted earnings per share of $1.45 on sales of $1.67 billion in fiscal Q3. Adjusted earnings per share missed the average analyst estimate by $0.11 per share, and sales for the period fell $50 million short of expectations.

Sales in the period were down 7.7% year over year, and earnings per share were down 15%. The company's gross margin expanded from 42.2% in the prior-year quarter to 44.6% in this year's period, but the margin gains weren't enough to offset the substantial sales decline.

What's next for Clorox?

In anticipation of headwinds this quarter, Clorox now expects sales for this fiscal year to be between down 1% and flat. Previously, management had guided for sales to come in between down 1% and up 2%. Organic sales growth for the year is projected to come in between 4% and 5% -- down from previous guidance for growth between 4% and 7%.

Clorox maintained its guidance for adjusted earnings per share to be between $6.95 and $7.35 for the year, and it's looking more likely that performance will come in at the lower end of that range. While Clorox has been seeing some solid margin expansion, the company could face significant challenges in light of recently implemented tariffs.

Should you invest $1,000 in Clorox right now?

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.