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Kimberly-Clark (KMB) Benefits From Saving Plans Amid High Costs
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Kimberly-Clark Corporation (KMB - Free Report) is focused on revenue growth management, which has been yielding. The consumer products company is taking robust steps to lower costs. Management is committed to its three key strategic growth pillars. However, the company is not immune to an inflationary environment.
Let’s delve deeper.
Solid Revenue Growth Management
Kimberly-Clark is benefiting from a focus on revenue growth management. Effective implementation of revenue growth management strategies (like pricing) and ongoing productivity initiatives have been protecting the gross margin. These factors drove Kimberly-Clark’s third-quarter 2023 performance. Kimberly-Clark’s quarterly sales rose 2% to $5,132 million. Organic sales increased 5% due to a 5% rise in the price as part of KMB’s ongoing revenue growth management programs and a 1% impact of the favorable product mix. The gross margin expanded 530 basis points (bps) to 35.8%, owing to increased net revenue realization, cost savings and lower input costs.
Image Source: Zacks Investment Research
Savings Program on Track
The Zacks Rank #3 (Hold) company has been taking robust steps to lower costs. This is highlighted by Focus on Reducing Costs Everywhere or FORCE Program. The company aggressively cuts costs and enhances supply-chain productivity through the FORCE Program. The program has been generating solid cost savings for a while, which is driving performance. In the third quarter of 2023, the company generated savings of $90 million from the FORCE program. Management expects FORCE savings of $300-$350 million in 2023.
Growth Pillars Aid Growth
Kimberly-Clark is committed to its three key strategic growth pillars. These include a 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. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
The company is progressing well with these objectives, which are aiding its portfolio and expanding global business. In February 2022, Kimberly-Clark Corporation acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category. In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market.
Cost Woes Stay
Kimberly-Clark has been battling an inflationary environment for a while now. Although the company’s gross margin expanded in the third quarter of 2023, it was affected by increased manufacturing costs. During 2023, management expects the operating profit to be affected by input costs to the tune of $50 million. Other manufacturing costs are likely to be a headwind of $250 million for the year. That said, we believe that the upsides mentioned above are likely to offer some respite.
Kimberly-Clark’s shares have dropped 4% in the past three months compared with the industry’s 1.4% decline.
The Zacks Consensus Estimate for MGP Ingredients’ current financial year sales and earnings suggests growth of almost 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2% on average.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial year sales and earnings suggests growth of 98.5% and 185.2%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial year sales suggests growth of 29.4% from the year-ago reported figure.
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Kimberly-Clark (KMB) Benefits From Saving Plans Amid High Costs
Kimberly-Clark Corporation (KMB - Free Report) is focused on revenue growth management, which has been yielding. The consumer products company is taking robust steps to lower costs. Management is committed to its three key strategic growth pillars. However, the company is not immune to an inflationary environment.
Let’s delve deeper.
Solid Revenue Growth Management
Kimberly-Clark is benefiting from a focus on revenue growth management. Effective implementation of revenue growth management strategies (like pricing) and ongoing productivity initiatives have been protecting the gross margin. These factors drove Kimberly-Clark’s third-quarter 2023 performance.
Kimberly-Clark’s quarterly sales rose 2% to $5,132 million. Organic sales increased 5% due to a 5% rise in the price as part of KMB’s ongoing revenue growth management programs and a 1% impact of the favorable product mix. The gross margin expanded 530 basis points (bps) to 35.8%, owing to increased net revenue realization, cost savings and lower input costs.
Image Source: Zacks Investment Research
Savings Program on Track
The Zacks Rank #3 (Hold) company has been taking robust steps to lower costs. This is highlighted by Focus on Reducing Costs Everywhere or FORCE Program. The company aggressively cuts costs and enhances supply-chain productivity through the FORCE Program. The program has been generating solid cost savings for a while, which is driving performance. In the third quarter of 2023, the company generated savings of $90 million from the FORCE program. Management expects FORCE savings of $300-$350 million in 2023.
Growth Pillars Aid Growth
Kimberly-Clark is committed to its three key strategic growth pillars. These include a 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. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
The company is progressing well with these objectives, which are aiding its portfolio and expanding global business. In February 2022, Kimberly-Clark Corporation acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category. In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market.
Cost Woes Stay
Kimberly-Clark has been battling an inflationary environment for a while now. Although the company’s gross margin expanded in the third quarter of 2023, it was affected by increased manufacturing costs. During 2023, management expects the operating profit to be affected by input costs to the tune of $50 million. Other manufacturing costs are likely to be a headwind of $250 million for the year. That said, we believe that the upsides mentioned above are likely to offer some respite.
Kimberly-Clark’s shares have dropped 4% in the past three months compared with the industry’s 1.4% decline.
Top 3 Staple Bets
MGP Ingredients, Inc. (MGPI - Free Report) produces and markets ingredients and distillery products to the packaged goods industry. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial year sales and earnings suggests growth of almost 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2% on average.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial year sales and earnings suggests growth of 98.5% and 185.2%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial year sales suggests growth of 29.4% from the year-ago reported figure.