Clorox is a 112-year-old consumer staples icon with 80% market share in charcoal, category leadership in bleach and trash bags, and 47 consecutive years of dividend increases. The stock has fallen 31% over the past year, now yielding 4.5%. Wall Street sees a buying opportunity in a quality franchise. We're not so sure.

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Our independent research reveals two findings the market may not have fully appreciated. First, stockholders' equity has collapsed to negative $22 million—down $343 million in a single quarter—reflecting years of capital returns systematically exceeding earnings capacity. Second, Bloomberg investigative reporting reveals $225-340 million in undisclosed technology infrastructure requirements beyond the stated ERP investment—legacy Windows 98/XP systems still running in manufacturing plants, deferred cybersecurity upgrades, and structural underinvestment now requiring catch-up spending. This compresses free cash flow and keeps the payout ratio elevated through 2029.

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The brand portfolio remains strong, but quality assets don't guarantee quality investments. With the stock trading at the upper bound of our fair value estimate, limited margin of safety exists for the execution risks ahead. We recommend holders reduce on strength and avoid new positions until the capital structure stabilizes.