When close to half the companies in the United States have price-to-earnings ratios (or “P/E’s”) below 18x, you may consider The Clorox Company (NYSE:CLX) as a stock to avoid entirely with its 72.3x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
Recent times have been pleasing for Clorox as its earnings have risen in spite of the market’s earnings going into reverse. It seems that many are expecting the company to continue defying the broader market adversity, which has increased investors’ willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.
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