It has been about a month since the last earnings report for Kimberly-Clark (KMB Quick QuoteKMB - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kimberly-Clark due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Kimberly-Clark Q3 Earnings Top, Organic Sales View Decreases

Kimberly-Clark reported third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate and improved year over year. Meanwhile, sales missed the consensus mark and declined year over year. The company’s organic sales grew year over year, driven by robust pricing.

Adjusted earnings were $1.83 per share, surpassing the Zacks Consensus Estimate of $1.69. The bottom line increased 5% year over year, courtesy of higher adjusted operating profit. Kimberly-Clark’s sales totaled $4,952 million, missing the consensus estimate of $5,063 million. The metric dropped 4% compared with the year-ago period’s figure. Unfavorable foreign currency rates affected sales by nearly 3% and the divestiture of KMB’s tissue and K-C Professional Personal Protective Equipment dented sales by about 1%.

The overall results reflect market share gains and enhanced productivity, even amid a dynamic consumer landscape. The company is successfully advancing its Powering Care strategy by accelerating its innovation pipeline, reducing costs and simplifying its operational structure to provide higher-quality consumer solutions. While management has revised its organic sales outlook downward, it reaffirms its earnings guidance for 2024.

Organic sales inched up 1% on the back of a 1% rise in price stemming from pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina. Our model suggests pricing to increase by 2.1% in the quarter. Volume and mix remained flat year over year. Volumes and mix showed positive growth in Developed Markets, including Australia, South Korea and Western/Central Europe, offset by a decline in North America. Meanwhile, volumes in Developing and Emerging (D&E) markets remained consistent with the previous year.

In North America, organic sales fell by 1%, due to a 3% decline in K-C Professional and a 1% drop in Consumer Tissue, while Personal Care sales remained stable year over year. In D&E markets, organic sales increased by 8%, driven by pricing gains in hyperinflationary economies. Organic sales in Developed Markets decreased by 2%, attributed to lower pricing.

The adjusted gross margin expanded 90 basis points (bps) to 36.7%. The upside can be attributed to solid gross productivity gains. The adjusted operating profit increased 5%, despite the adverse impact of unfavorable currency translations to the tune of 4% points stemming from hyperinflationary economies. Excluding currency impacts, the growth in adjusted operating profit was driven by gross productivity gains, stable pricing when adjusted for cost inflation, supply chain investments and planned increases in marketing, research and general expenses.

KMB Provides Third-Quarter Insights by Segment

Personal Care: Segment sales of $2,635 million fell 2% year over year. Organic sales rose by 3%, driven by pricing actions in hyperinflationary economies and improvements in the mix, while volume remained consistent with the previous year’s level across all markets. Segmental operating profit amounted to $482 million, down 4%.

Consumer Tissue: Segment sales of $1,539 million dropped 2% year over year. Our model suggested a sales decline of 1% in the segment. Organic sales inched down 1%, due to retailer inventory reductions in North America and anticipated lower pricing in Western Europe. Segmental operating profit amounted to $265 million, down 1%. 

K-C Professional: Segment sales slumped 10% to $767 million due to unfavorable currency rates, divestitures and business exits. Our model suggested a sales decline of 7.5% in the segment. Organic sales inched down 1%, attributed to unfavorable pricing impact. The operating profit in the segment stood at $161 million, down 4%.

What to Expect From KMB in 2024?

Organic net sales are now projected to grow between 3% and 4%, compared to a previously anticipated mid-single-digit growth rate, due to specific challenges related to changes in retail inventory levels. Reported net sales are likely to reflect an unfavorable currency impact to the tune of nearly 400 bps and a 120-bps headwind from divestitures.

The adjusted operating profit is still projected to grow at a mid-to-high teens percentage rate on a constant-currency (cc) basis in 2024. The adjusted earnings per share (EPS) is also still anticipated to rise at a mid-to-high teens percentage rate at cc.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -7.63% due to these changes.

VGM Scores

At this time, Kimberly-Clark has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Kimberly-Clark has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Kimberly-Clark belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Albertsons Companies, Inc. (ACI Quick QuoteACI - Free Report) , has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended August 2024.

Albertsons Companies reported revenues of $18.55 billion in the last reported quarter, representing a year-over-year change of +1.4%. EPS of $0.51 for the same period compares with $0.63 a year ago.

For the current quarter, Albertsons Companies is expected to post earnings of $0.66 per share, indicating a change of -16.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.3% over the last 30 days.

Albertsons Companies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.