Today's Must Read
Kimberly-Clark (KMB) Benefits From Solid Cost-Saving Efforts
Debt Reductions, Growth Projects Aid Barrick (GOLD)
Monday, October 3, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including The Walt Disney Company (DIS), Kimberly-Clark Corporation (KMB) and Barrick Gold Corporation (GOLD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Walt Disney shares have underperformed the broader market this year (-39.1% vs. -24.8%) on the back of sentiment shift about the streaming business that had earlier helped the stock move higher. Other issues in the Disney story have been the adverse impact of coronavirus on theme park business, higher programming and production costs at Linear Networks, heavy investments on Disney+, and a leveraged balance sheet.
However, the company is benefitting from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering. Availability in the Nordics, Latin America and other Asian territories is helping it expand its user base. Theme Park business is likely to gain from strong demand across both the domestic and international parks.
Kimberly-Clark’s shares have declined -10.0% over the past six-month period against the Zacks Consumer Products – Staples industry’s decline of -28.0%. The Zacks analyst believes that Kimberly-Clark has been battling high input costs for a while now. The same persisted in the second quarter of 2022, with operating profit declining due to a rise in input costs to the tune of $405 million. Management expects adjusted operating profit to be down mid-single digit percent during 2022. Key input costs are estimated to escalate $1.4-$1.6 billion in 2022.
Nonetheless, the company has been benefiting from its three growth pillars. These include focus on improving its core business in the developed markets, speeding up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. Apart from this, the company’s pricing and saving initiatives have been aiding amid a rising cost environment.
Barrick Gold shares have underperformed the Zacks Mining – Gold industry over the past year (-15.0% vs. -8.6%). The Zacks analyst believes that the company’s higher costs might dent its margins in 2022. Uncertainties surrounding the pandemic may impact demand for gold over the short term. Gold prices are also expected to remain volatile over the near term and are likely to be affected by interest rate hikes in 2022. Weaker copper prices are another concern.
However, the company is expected to gain from progress in key growth projects that are likely to contribute to production. Barrick’s debt-reduction actions are also expected to lower interest expenses. It has a strong liquidity position and is focused on boosting shareholders’ returns by leveraging solid cash flows. Moreover, Barrick’s merger with Randgold and joint venture with Newmont provides additional upsides.
Other noteworthy reports we are featuring today include Teck Resources Limited (TECK), FactSet Research Systems Inc. (FDS), and American Financial Group, Inc. (AFG).
Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>