Yahoo Finance Why Is Kimberly-Clark (KMB) Down 2.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Kimberly-Clark (KMB). Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kimberly-Clark due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kimberly-Clark Tops Q1 Earnings Estimates, Ups FY24 View
Kimberly-Clark posted first-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. The top line also surpassed the consensus mark but declined year over year. Taking into account a solid start to fiscal 2024, management raised its annual guidance.
Quarter in Detail
Adjusted earnings came in at $2.01 per share, surpassing the Zacks Consensus Estimate of $1.61. The bottom line increased 20% year over year, courtesy of higher adjusted operating profit. Reduced net interest, effective tax rate as well as increased equity income were upsides.
Kimberly-Clark’s sales totaled $5,149 million, surpassing the consensus estimate of $5,075.8 million. The metric inched down 1% compared with the year-ago period’s figure. Unfavorable foreign currency rates affected sales by nearly 5% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.
Organic sales increased 6% on the back of a 4% rise in price stemming from pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina. Product mix and volume were favorable by 1% each, with strength across North America, Developing and Emerging (D&E) markets, and Developed Markets.
In North America, organic sales rose 3% year over year, which included 2% growth in Personal Care and a 6% increase in Consumer Tissue. These were somewhat offset by a 1% decline in the K-C Professional.
Outside North America, organic sales rose 15% in developing and emerging markets. In the developed markets (Australia, South Korea and Western/Central Europe), the metric fell 2%.
The gross margin expanded 390 basis points (bps) to 37.1%. The upside can be attributed to organic growth and gross productivity gains. However, cost inflation, mainly in developing markets and supply chain-related investments, remained concerning.
The operating profit came in at $853 million, up from $787 million reported in the year-ago quarter. Adjusted operating profit jumped 14% despite the adverse impact of unfavorable currency translations to the tune of 12 percentage points stemming from hyperinflationary economies.
Segment Details
Personal Care: Segment sales of $2,713 million remained flat year over year, surpassing our estimate of 0.6% decline. Organic sales rose 10% on a favorable price, mix and volumes. Management highlighted that innovation, strong commercial execution and better supply trends led to volume growth.
Consumer Tissue: Segment sales of $1,599 million dropped 2% year over year. The downside can be attributed to divestitures and business exits. Our model suggested a sales decline of 5.7% in the segment. Organic sales remained flat year over year.
K-C Professional: Segment sales fell 3% to $823 million due to divestitures and business exits. Our model suggested a sales decline of 5.3% in the segment. Organic sales increased 2%. Favorable price realization and product mix countered reduced volumes.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $853 million, long-term debt of $7,161 million and total stockholders’ equity of $1,184 million.
Cash provided by operations was $438 million for three months ended Mar 31, 2024. Management incurred capital spending of $194 million in the same time frame. It returned $452 million to shareholders via dividends and share buybacks.
2024 Guidance
Management now anticipates organic net sales to increase in mid-single-digit percentage compared with the earlier view of low-to-mid single-digit growth. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 400 bps and a 120-bps headwind from divestitures.
The adjusted operating profit is projected to grow at a low-teens percentage rate at a cc basis in 2024. Earlier, the company had projected the metric to grow at a high single-digit to low double-digit rate on a cc basis. Adjusted EPS is now anticipated to grow at a low-teens percentage rate at cc compared with the previous expectation of a high single-digit growth.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Kimberly-Clark has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Kimberly-Clark has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Kimberly-Clark belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Albertsons Companies, Inc. (ACI), has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended February 2024.
Albertsons Companies reported revenues of $18.34 billion in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $0.54 for the same period compares with $0.79 a year ago.
Albertsons Companies is expected to post earnings of $0.68 per share for the current quarter, representing a year-over-year change of -26.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -17.5%.
Albertsons Companies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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