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Kimberly-Clark (KMB) Gains From Brand Strength & FORCE Program
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Kimberly-Clark Corporation (KMB - Free Report) appears well-placed due to its focus on innovation, consumer-centric approach and strategic investments in product development, which have been leading to successful launches and market expansion. These upsides, along with savings initiatives, have been working well for the company amid cost inflation.
For 2024, management anticipates organic net sales growth in the low-to-mid-single-digit percentage range. However, organic net sales growth in the first quarter is expected to be lower compared to the full year. The company foresees relatively balanced reported net sales growth between the first and second halves of the year.
The adjusted operating profit is projected to grow at a high-single-digit to a low-double-digit rate on a constant-currency (cc) basis in 2024. Adjusted earnings per share (EPS) are anticipated to grow at a high-single-digit rate on a cc basis.
Image Source: Zacks Investment Research
Key Upsides
Kimberly-Clark has been benefiting from a focus on revenue growth management. Effective implementation of revenue growth management strategies (like pricing) and ongoing productivity initiatives have been aiding KMB’s organic sales and gross margin amid cost inflation. In the fourth quarter of 2023, the company’s organic sales increased 3% due to a 2% rise in the price stemming from ongoing revenue growth management programs and a 1% positive product mix. Additionally, the gross margin expanded 210 basis points (bps) to 34.9%. The upside can be attributed to increased net revenue realization amid other factors.
The company emphasizes the importance of strategic priorities, such as playing to win by elevating categories, expanding markets and driving profitable growth through margin recovery and disciplined cost management. Kimberly-Clark has been 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 has been meeting these goals through product development across different categories and leveraging capabilities in marketing and sales. In the full year of 2023, Kimberly-Clark undertook successful innovation in two of the most demanded Personal Care categories — Skin Health & Wellness and Leak-Free Comfort. On its fourth-quarter earnings call, management stated that new product introductions over the last three years accounted for 54% of the company’s 2023 net sales across the Consumer businesses.
Kimberly-Clark has been taking robust steps to lower costs. This is highlighted by the Focus on Reducing Costs Everywhere or FORCE Program, through which Kimberly-Clark aggressively cuts costs and enhances supply-chain productivity. In the fourth quarter of 2023, the company generated savings of $50 million from the FORCE program, which helped drive gross margin expansion.
Hurdles on Way
Kimberly-Clark has been battling an inflationary environment for a while now. Although the company’s gross margin expanded in the fourth quarter of 2023, it was affected by increased manufacturing costs. The company expects lower raw material costs to be countered by elevated distribution and labor costs, per the last earnings call.
Inflationary economies in some markets have also posed challenges for the company’s product volumes. This is because inflation causes companies to resort to necessary price increases, which affects consumer affordability and demand. An inflationary landscape in some of the developing countries where Kimberly-Clark operates is likely to remain a hurdle in the near term. Apart from this, Kimberly-Clark remains vulnerable to currency fluctuations. Currency headwinds are likely to hurt net sales by nearly 300 basis points in 2024.
Wrapping Up
Kimberly Clark has been focused on long-term growth opportunities, including leveraging its brand investments, enhancing product mix and driving volume growth through consumer-focused strategies. Additionally, the new operating model and key commercial efforts aimed at growing the brand and business are likely to help the company battle the abovementioned challenges.
Shares of this Zacks Rank #3 (Hold) company have risen 5.8% in the past three months compared with the industry’s growth of 2.7%.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks and currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 15.8% from the year-ago reported numbers.
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Kimberly-Clark (KMB) Gains From Brand Strength & FORCE Program
Kimberly-Clark Corporation (KMB - Free Report) appears well-placed due to its focus on innovation, consumer-centric approach and strategic investments in product development, which have been leading to successful launches and market expansion. These upsides, along with savings initiatives, have been working well for the company amid cost inflation.
For 2024, management anticipates organic net sales growth in the low-to-mid-single-digit percentage range. However, organic net sales growth in the first quarter is expected to be lower compared to the full year. The company foresees relatively balanced reported net sales growth between the first and second halves of the year.
The adjusted operating profit is projected to grow at a high-single-digit to a low-double-digit rate on a constant-currency (cc) basis in 2024. Adjusted earnings per share (EPS) are anticipated to grow at a high-single-digit rate on a cc basis.
Image Source: Zacks Investment Research
Key Upsides
Kimberly-Clark has been benefiting from a focus on revenue growth management. Effective implementation of revenue growth management strategies (like pricing) and ongoing productivity initiatives have been aiding KMB’s organic sales and gross margin amid cost inflation. In the fourth quarter of 2023, the company’s organic sales increased 3% due to a 2% rise in the price stemming from ongoing revenue growth management programs and a 1% positive product mix. Additionally, the gross margin expanded 210 basis points (bps) to 34.9%. The upside can be attributed to increased net revenue realization amid other factors.
The company emphasizes the importance of strategic priorities, such as playing to win by elevating categories, expanding markets and driving profitable growth through margin recovery and disciplined cost management. Kimberly-Clark has been 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 has been meeting these goals through product development across different categories and leveraging capabilities in marketing and sales. In the full year of 2023, Kimberly-Clark undertook successful innovation in two of the most demanded Personal Care categories — Skin Health & Wellness and Leak-Free Comfort. On its fourth-quarter earnings call, management stated that new product introductions over the last three years accounted for 54% of the company’s 2023 net sales across the Consumer businesses.
Kimberly-Clark has been taking robust steps to lower costs. This is highlighted by the Focus on Reducing Costs Everywhere or FORCE Program, through which Kimberly-Clark aggressively cuts costs and enhances supply-chain productivity. In the fourth quarter of 2023, the company generated savings of $50 million from the FORCE program, which helped drive gross margin expansion.
Hurdles on Way
Kimberly-Clark has been battling an inflationary environment for a while now. Although the company’s gross margin expanded in the fourth quarter of 2023, it was affected by increased manufacturing costs. The company expects lower raw material costs to be countered by elevated distribution and labor costs, per the last earnings call.
Inflationary economies in some markets have also posed challenges for the company’s product volumes. This is because inflation causes companies to resort to necessary price increases, which affects consumer affordability and demand. An inflationary landscape in some of the developing countries where Kimberly-Clark operates is likely to remain a hurdle in the near term. Apart from this, Kimberly-Clark remains vulnerable to currency fluctuations. Currency headwinds are likely to hurt net sales by nearly 300 basis points in 2024.
Wrapping Up
Kimberly Clark has been focused on long-term growth opportunities, including leveraging its brand investments, enhancing product mix and driving volume growth through consumer-focused strategies. Additionally, the new operating model and key commercial efforts aimed at growing the brand and business are likely to help the company battle the abovementioned challenges.
Shares of this Zacks Rank #3 (Hold) company have risen 5.8% in the past three months compared with the industry’s growth of 2.7%.
Solid Staple Bets
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks and currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 15.8% from the year-ago reported numbers.