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Kimberly-Clark (KMB) Q4 Earnings: Stock to Disappoint?
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Kimberly Clark Corporation (KMB - Free Report) is set to report fourth-quarter 2016 results before the opening bell on Jan 24. Last quarter, the company posted a negative earnings surprise of 1.30%. The company has posted two positive and two negative surprises in the trailing four quarters with an average positive surprise of 0.50%.
Let us see how things are shaping up for this announcement.
Kimberly-Clark Corp. Price, Consensus and EPS Surprise
Kimberly-Clark has been disappointing investors of late, which is hurting its share price.
The company reported lower-than-expected results in the preceding quarter, wherein both earnings and revenues lagged the Zacks Consensus Estimate. The company also lowered its 2016 guidance for earnings and organic sales growth.
Kimberly-Clark has been witnessing sluggish organic sales growth, especially in developing and emerging markets, over the past few quarters. In the third quarter, organic sales declined in all the other regions, except in developing and emerging markets, where the figure was up 3%. However, growth decelerated from 5% increase witnessed in the first and second quarters, as performance improved in China but softened in Latin America. Brazil and Argentina were affected in particular due to lower volumes, and highly competitive promotional activity and an even more difficult economic environment.
Though the company has strong long-term growth prospects in developing and emerging markets, the current promotional environment is weakening the market dynamics. Further, it is difficult to predict when growth will pick up significant pace again. Hence, we expect the trend to remain the same in the fourth quarter as well.
In fact, Kimberly-Clark’s shares have been underperforming the Zacks categorized Consumer Products-Miscellaneous Staples industry since the past one year. The stock has declined by 5.9% in comparison with the industry’s growth of 6.0%. Notably, the industry is part of the bottom 9% of the Zacks Classified industries (240 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Though the company is relying on cost saving measures and restructuring programs to drive earnings, it is also striving to reduce expenses and buying back shares. These moves are aimed at boosting the comapany’s profits. However, Kimberly-Clark anticipates currency volatility, increased competition and higher marketing expenses to hurt profits in the near term.
Earnings Whispers
Our proven model does not conclusively show that Kimberly-Clark is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Kimberly-Clark is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.42. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kimberly-Clark carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank, and are therefore worth considering include:
Lancaster Colony Corporation (LANC - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3.
Coty, Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Kimberly-Clark (KMB) Q4 Earnings: Stock to Disappoint?
Kimberly Clark Corporation (KMB - Free Report) is set to report fourth-quarter 2016 results before the opening bell on Jan 24. Last quarter, the company posted a negative earnings surprise of 1.30%. The company has posted two positive and two negative surprises in the trailing four quarters with an average positive surprise of 0.50%.
Let us see how things are shaping up for this announcement.
Kimberly-Clark Corp. Price, Consensus and EPS Surprise
Kimberly-Clark Corp. Price, Consensus and EPS Surprise | Kimberly-Clark Corp. Quote
Factors to Consider
Kimberly-Clark has been disappointing investors of late, which is hurting its share price.
The company reported lower-than-expected results in the preceding quarter, wherein both earnings and revenues lagged the Zacks Consensus Estimate. The company also lowered its 2016 guidance for earnings and organic sales growth.
Kimberly-Clark has been witnessing sluggish organic sales growth, especially in developing and emerging markets, over the past few quarters. In the third quarter, organic sales declined in all the other regions, except in developing and emerging markets, where the figure was up 3%. However, growth decelerated from 5% increase witnessed in the first and second quarters, as performance improved in China but softened in Latin America. Brazil and Argentina were affected in particular due to lower volumes, and highly competitive promotional activity and an even more difficult economic environment.
Though the company has strong long-term growth prospects in developing and emerging markets, the current promotional environment is weakening the market dynamics. Further, it is difficult to predict when growth will pick up significant pace again. Hence, we expect the trend to remain the same in the fourth quarter as well.
In fact, Kimberly-Clark’s shares have been underperforming the Zacks categorized Consumer Products-Miscellaneous Staples industry since the past one year. The stock has declined by 5.9% in comparison with the industry’s growth of 6.0%. Notably, the industry is part of the bottom 9% of the Zacks Classified industries (240 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Though the company is relying on cost saving measures and restructuring programs to drive earnings, it is also striving to reduce expenses and buying back shares. These moves are aimed at boosting the comapany’s profits. However, Kimberly-Clark anticipates currency volatility, increased competition and higher marketing expenses to hurt profits in the near term.
Earnings Whispers
Our proven model does not conclusively show that Kimberly-Clark is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Kimberly-Clark is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.42. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kimberly-Clark carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank, and are therefore worth considering include:
Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lancaster Colony Corporation (LANC - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3.
Coty, Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>