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Kimberly-Clark (KMB) Looks Appealing on Cost-Saving Efforts
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Kimberly-Clark Corporation (KMB - Free Report) looks well placed on the back of its robust growth endeavors. In this regard, the company’s key strategic growth pillars and cost-saving plans are yielding. Moreover, its K-C Strategy bodes well. Apart from these, the company is witnessing higher consumer demand for its products stemming from stockpiling amid the coronavirus outbreak.
Impressively, management projects 2020 net sales to grow in the range of 1-2%. Further, Kimberly-Clark projects organic sales improvement of 4-5% in the same period. Also, it envisions adjusted earnings per share of $7.40-$7.60 in 2020, which indicates an increase from $6.89 reported in 2019.
We note that, Kimberly-Clark’s shares have gained 8.9% in the year-to-date period against the industry’s decline of 3.4%.
Let’s delve deeper.
Factors Working in Favor of Kimberly-Clark
Kimberly-Clark is progressing well with its three key strategic growth pillars, which are aiding portfolio and expanding global business. These include focus on improving its core business in the developed markets; accelerate growth in the Personal Care segment in developing and emerging markets as well as enhance digital and e-commerce capacities. Notably, Kimberly-Clark recently signed a definitive agreement to acquire Softex Indonesia — a leading player in the Indonesia personal care market. The company expects the deal to augment its footprint in the Southeast Asia region.
Also, Kimberly-Clark is undertaking robust steps to lower costs. This is highlighted from the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program, which is the company’s biggest restructuring plan, focuses on enhancing profitability by simplifying the supply chain and manufacturing structures. This enables Kimberly-Clark to compete better and provides it more flexibility to undertake growth-oriented investments.
Until the end of second-quarter 2020, the company generated cumulative savings worth $380 million from the 2018 Global Restructuring Program. Management is on track to generate pre-tax savings of $500-$550 million from this program by the end of 2021. Some of these could be realized in 2022 due to uncertainties regarding the coronavirus outbreak. Also, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its FORCE Program. The program has been generating solid cost savings for a while, which are in turn driving the company’s adjusted operating profit.
Apart from these, the company’s K-C Strategy 2022 that was introduced in January 2019 is noteworthy. The strategy concentrates on strengthening the company’s brand portfolio, undertaking efficient capital allocation and executing robust cost discipline.
Is all Rosy for Kimberly-Clark?
Kimberly-Clark’s K-C Professional has been witnessing softness thanks to coronavirus-induced stay-at-home trend. Apart from this, rising marketing, research and general expenses are a concern for the company. Moreover, it remains exposed to unfavorable foreign currency translations as Kimberly-Clark has a considerable international presence. In fact, management expects currency headwinds to impact net sales by 3% in 2020.
Nevertheless, the aforementioned upsides are likely to help this Zacks Rank #2 (Buy) company stay in investors’ good books.
Ollie’s Bargain Outlet (OLLI - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 21.6%.
Newell Brands (NWL - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 1.7%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Kimberly-Clark (KMB) Looks Appealing on Cost-Saving Efforts
Kimberly-Clark Corporation (KMB - Free Report) looks well placed on the back of its robust growth endeavors. In this regard, the company’s key strategic growth pillars and cost-saving plans are yielding. Moreover, its K-C Strategy bodes well. Apart from these, the company is witnessing higher consumer demand for its products stemming from stockpiling amid the coronavirus outbreak.
Impressively, management projects 2020 net sales to grow in the range of 1-2%. Further, Kimberly-Clark projects organic sales improvement of 4-5% in the same period. Also, it envisions adjusted earnings per share of $7.40-$7.60 in 2020, which indicates an increase from $6.89 reported in 2019.
We note that, Kimberly-Clark’s shares have gained 8.9% in the year-to-date period against the industry’s decline of 3.4%.
Let’s delve deeper.
Factors Working in Favor of Kimberly-Clark
Kimberly-Clark is progressing well with its three key strategic growth pillars, which are aiding portfolio and expanding global business. These include focus on improving its core business in the developed markets; accelerate growth in the Personal Care segment in developing and emerging markets as well as enhance digital and e-commerce capacities. Notably, Kimberly-Clark recently signed a definitive agreement to acquire Softex Indonesia — a leading player in the Indonesia personal care market. The company expects the deal to augment its footprint in the Southeast Asia region.
Also, Kimberly-Clark is undertaking robust steps to lower costs. This is highlighted from the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program, which is the company’s biggest restructuring plan, focuses on enhancing profitability by simplifying the supply chain and manufacturing structures. This enables Kimberly-Clark to compete better and provides it more flexibility to undertake growth-oriented investments.
Until the end of second-quarter 2020, the company generated cumulative savings worth $380 million from the 2018 Global Restructuring Program. Management is on track to generate pre-tax savings of $500-$550 million from this program by the end of 2021. Some of these could be realized in 2022 due to uncertainties regarding the coronavirus outbreak. Also, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its FORCE Program. The program has been generating solid cost savings for a while, which are in turn driving the company’s adjusted operating profit.
Apart from these, the company’s K-C Strategy 2022 that was introduced in January 2019 is noteworthy. The strategy concentrates on strengthening the company’s brand portfolio, undertaking efficient capital allocation and executing robust cost discipline.
Is all Rosy for Kimberly-Clark?
Kimberly-Clark’s K-C Professional has been witnessing softness thanks to coronavirus-induced stay-at-home trend. Apart from this, rising marketing, research and general expenses are a concern for the company. Moreover, it remains exposed to unfavorable foreign currency translations as Kimberly-Clark has a considerable international presence. In fact, management expects currency headwinds to impact net sales by 3% in 2020.
Nevertheless, the aforementioned upsides are likely to help this Zacks Rank #2 (Buy) company stay in investors’ good books.
Other Solid Staple Bets
Grocery Outlet (GO - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 14.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ollie’s Bargain Outlet (OLLI - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 21.6%.
Newell Brands (NWL - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 1.7%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>