Clorox trades at $126.98 per share and has stayed right on track with the overall market, gaining 5.8% over the last six months. At the same time, the S&P 500 has returned 7.7%.

Is now the time to buy Clorox, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

We're sitting this one out for now. Here are three reasons we avoid CLX and a stock we'd rather own.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Clorox’s demand was weak and its revenue declined by 1.5% per year. This wasn’t a great result and signals it’s a lower quality business.

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.

The demand for Clorox’s products has been stable over the last eight quarters but fell behind the broader sector. On average, the company has posted feeble year-on-year organic revenue growth of 1.9%.

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Clorox’s revenue to stall. While this projection suggests its newer products will fuel better top-line performance, it is still below average for the sector.

Clorox isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 19.1× forward P/E (or $126.98 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. Let us point you toward an all-weather company that owns household favorite Taco Bell.

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