Kimberly-Clark Corporation (KMB - Free Report) has been gaining from improved volumes in emerging markets and its dedicated focus on cost saving, innovation and restructuring. Such strategic plans are expected to drive this Zacks Rank #2 (Buy) company’s performance in 2018 and augment its portfolio and market share.
Cost Savings Aid Profitability
Kimberly-Clark is aggressively cutting costs through the program — Focus on Reducing Costs Everywhere or FORCE. The program has been positively impacting the company’s profits. During the third quarter, the company managed to deliver cost savings of $125 million which drove bottom-line performance. For 2017, the company previously stated that it expects to generate cost savings in the range of $425-$450 million.
Focus on Innovations
Being a vital player in consumer essentials category, Kimberly-Clark regularly undertakes innovation and launches products to adapt with changing consumer needs and demands. In fact, the company has a number of innovations lined up for launch in the near term, particularly in North America, including upgrades on Huggies Snug and Dry diapers, Good Nights youth pants and Depend underwear.
Restructuring Efforts Bode Well
Additionally, the company has been able to attain greater operating efficiencies and profitability on the back of restructuring efforts. Such initiatives mainly include exiting lower-margin businesses, streamlining manufacturing activities and enhancing focus on growth-oriented arenas. Further, Kimberly-Clark is well positioned overseas and has been expanding in developing and emerging markets.
Such factors have aided Kimberly-Clark to outperform the industry over a year. While the company gained just 2.1% in the said time frame, it fared much better than the industry’s decline of about 3.7%.
Kimberly-Clark’s dedicated efforts to continue expanding market share and profitability are quite noteworthy. Moreover, we expect favorable economic conditions to drive spending on consumer essentials and personal care items, further boosting Kimberly-Clark’s performance in the forthcoming periods.
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Investors interested in the same sector may also consider stocks such as Estee Lauder Companies Inc (EL - Free Report) , United Natural Foods Inc. (UNFI - Free Report) and Church & Dwight Company Inc. (CHD - Free Report) , all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estee Lauder came up with an average positive earnings surprise of 18% in the trailing four quarters. It has a long-term earnings growth rate of 12.5%.
United Natural Foods pulled off an average positive earnings surprise of 2.3% in the trailing four quarters. Also, it has a long-term earnings growth rate of 6.2%.
Church & Dwight delivered an average positive earnings surprise of 6.8% in the trailing four quarters. It has a long-term earnings growth rate of 8.9%.
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