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Will Kimberly-Clark (KMB) Beat Estimates in Q1 Earnings?

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Kimberly-Clark Corporation (KMB - Free Report) is slated to release first-quarter 2019 results on Apr 22. The company delivered a negative earnings surprise of 4.8% in the last reported quarter and has a mixed surprise record for the trailing four quarters.

Let’s see how things are placed ahead of this release.

What to Expect?

The Zacks Consensus Estimate for earnings has remained stable over the past 30 days at $1.55, which reflects a decline of 9.4% from the year-ago quarter’s figure. Moreover, the consensus mark for revenues is $4,486 million, reflecting a drop of 5.2% year over year.

In the last reported quarter, the top line dipped almost 1% year over year, whereas the bottom line showcased a rise of nearly 2%.

Factors Likely to Impact Q1

Higher input costs have been weighing on Kimberly-Clark’s margins. Management expects input cost inflation of $300-$400 million for 2019, which might show on first-quarter results.

Additionally, Kimberly-Clark is exposed to unfavorable foreign currency translation given significant international presence. For 2019, the company expects high-single-digit adverse impact from currency, which along with high-priced commodities pose concerns for the first quarter as well. In fact, escalated costs are posing as hurdles for many consumer staples players like Church & Dwight (CHD - Free Report) , General Mills (GIS - Free Report) and Campbell Soup (CPB - Free Report) , among others.

Nevertheless, Kimberly-Clark is focused on taking robust steps to lower costs. This is highlighted by the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program. These programs are aimed at cutting costs and simplifying supply chain to enhance the company’s underlying profitability. Savings from these programs along with Kimberly-Clark’s focus on its three key growth pillars are likely to cushion the stock in the quarter to be reported.

Notably, the Zacks Consensus Estimate for first-quarter sales at the Personal Care segment is currently pegged at $2,180 million, reflecting a fall of 5.5% from the year-ago quarter’s figure. Further, the consensus marks for the Consumer Tissue and K-C Professional & Other segments stand at $1,480 million and $811 million compared with $1,579 million and $832 million recorded in the year-ago quarter, respectively.

What the Zacks Model Unveils

Our proven model shows that Kimberly-Clarkis likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kimberly-Clark carries a Zacks Rank #2, which along with an Earnings ESP of +0.76%, makes us reasonably confident of a beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

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