Back to top

Image: Bigstock

Things to Note as Kimberly-Clark (KMB) Lines Up for Q2 Earnings

Read MoreHide Full Article

Kimberly-Clark Corporation (KMB - Free Report) is likely to register top-line growth when it reports second-quarter 2022 earnings on Jul 26. The Zacks Consensus Estimate for quarterly revenues is pegged at $4,912 million, suggesting a rise of nearly 4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at $1.28 per share, suggesting a decrease of 12.9% from the figure reported in the prior-year quarter. This personal care and consumer tissue products company has a negative trailing four-quarter earnings surprise of 1.5%, on average. KMB delivered an earnings surprise of 9.8% in the last reported quarter.

KimberlyClark Corporation Price, Consensus and EPS Surprise

KimberlyClark Corporation Price, Consensus and EPS Surprise

KimberlyClark Corporation price-consensus-eps-surprise-chart | KimberlyClark Corporation Quote

Factors to Note

Kimberly-Clark has been battling high input costs for the past few quarters. The trend persisted in the first quarter of 2022 with a gross margin of 29.8%, which contracted 420 basis points compared with the year-ago quarter’s adjusted gross margin. The metric was hurt by significant, more-than-anticipated input cost inflation. The adjusted operating profit amounted to $629 million, down from $804 million in the year-ago quarter, due to a rise in input costs to the tune of $470 million. An increase in pulp and polymer-based materials and distribution and energy costs led to a rise in input costs. Escalated marketing, research and general expenses and unfavorable foreign currency also affected the operating profit.

Management expects the adjusted operating profit to be down in the low to mid-single-digit percent in 2022. Key input costs are estimated to escalate by $1.1 to $1.3 billion in 2022, up from the initial expectation in the band of $750-$900 million. Management expects costs to rise or remain escalated for most inputs like polymer-based materials and pulp and distribution and energy. These aspects raise concerns for the quarter to be reported.

That said, management has been focused on undertaking relevant pricing actions to counter inflation and efficiently manage costs. Also, Kimberly-Clark has been committed to its Focus on Reducing Costs Everywhere or FORCE Program and 2018 Global Restructuring Program. Apart from this, KMB has been committed to its three key strategic growth pillars. These include a focus on improving its core business in developed markets, speeding up the growth of the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Kimberly-Clark this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Kimberly-Clark carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.

Corteva (CTVA - Free Report) currently has an Earnings ESP of +8.12% and a Zacks Rank of 1. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings has been unchanged at $1.46 per share in the past 30 days. The consensus mark for CTVA’s earnings suggests 4.3% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.

Corteva’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.2 billion, which suggests a rise of 9.4% from the figure reported in the prior-year quarter. CTVA delivered an earnings beat of 22.3%, on average, in the trailing four quarters.

Archer Daniels (ADM - Free Report) currently has an Earnings ESP of +2.59% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 results. The Zacks Consensus Estimate for ADM’s quarterly earnings has moved up by almost 3% in the past 30 days to $1.74 per share. The consensus mark indicates 30.8% growth from the year-ago quarter’s reported number.

Archer Daniels’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $25.3 billion, which suggests a rise of 10.2% from the figure reported in the prior-year quarter. ADM delivered an earnings beat of 22.3%, on average, in the trailing four quarters.

Tyson Foods (TSN - Free Report) currently has an Earnings ESP of +5.71% and a Zacks Rank of 3. The company is likely to register a rise in the top line when it reports third-quarter fiscal 2022 results. The consensus mark for TSN’s quarterly revenues is pegged at $13.4 billion, which suggests a jump of 7% from the figure reported in the prior-year quarter.

The consensus mark for Tyson Foods’ quarterly earnings has moved down from $1.92 to $1.88 per share in the past 30 days. The consensus estimate for TSN’s third-quarter earnings suggests a decline of 30.4% from the year-ago quarter’s reported figure. Tyson Foods delivered an earnings beat of 33.3%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Published in