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Bear Of The Day: KimberlyClark (KMB)

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KimberlyClark (KMB - Free Report) is a Zacks Rank #5 (Strong Sell) and it just missed its second earnings report in a row.  Earnings estimates are falling, and that has investors concerned. Let’s take a look at why that is the case in this Bear of the Day article.

Description

Kimberly-Clark Corporation is principally engaged in the manufacture and marketing of a wide range of consumer products around the world. The company sells its products to supermarkets; mass merchandisers; drugstores; warehouse clubs; variety and department stores; retail outlets; manufacturing, lodging, office building, food service, and health care establishments; and high volume public facilities. The company has the following brands: Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Neve, Plenitud, Sweety, Softex, Viva and WypAll.  The company was found in 1928 in Delaware.

Earnings History

The first thing I do when I look at stock is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of KMB, I see one beat and three misses of the Zacks Consensus Estimate.  This alone does not make the stock a Zacks Rank #5 (Strong Sell). 

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For KMB, I see estimates fluctuating.

This quarter has held still at $1.88.

Next quarter has actually seen some increases.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is negative for those numbers.

The 2021 consensus number has fallen from $7.41 to $7.19.

The 2022 number has moved from $7.85 to $7.75 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

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