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Can FORCE Program Drive Kimberly-Clark's (KMB) Q4 Earnings?
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Kimberly-Clark Corporation (KMB - Free Report) is slated to release fourth-quarter 2017 results on Jan 23. The question lingering in investors’ minds is, whether this consumer products company will be able to deliver a positive earnings surprise in the quarter to be reported. Well the company has outperformed earnings estimates in three of the past four quarters. Let’s see how things are shaping up prior to this announcement.
The current Zacks Consensus Estimate for the quarter under review is pegged at $1.55, which represents nearly 7% growth from the year-ago period. This estimate has remained stable over the last 30 days. Moreover, analysts polled by Zacks expect revenues of $4,591 million, up about 1% from the year-ago quarter.
Factors at Play
Kimberly-Clark witnessed year-over-year growth in both top and bottom line in the last quarter, driven by higher sales at Consumer Tissue and K-C Professional (KCP) and Other segments, along with robust cost savings from its Focus on Reducing Costs Everywhere (FORCE) program. Sales at the aforementioned segments gained from higher volumes backed by the company’s effective merchandising strategy. This also helped the company to witness marginal growth in organic sales at its overall consumer business, after a 3% drop in the first half of 2017. Region wise, organic sales remained flat in North America, grew 3% in emerging markets, while it dropped by the same rate in developed markets. Softness in the developed markets mainly stemmed from weak diaper sales in South Korea due to a considerably fall in birth rate.
Moving to the company’s Personal Care Products segment, which constituted about 50% of Kimberly-Clark’s total sales, we note that sales remained soft owing to lower volumes as well as net selling prices. Well, lower net selling price remains a concern for the overall company, owing to intense competition and heightened promotional activities. In fact, North America remains particularly challenged due to these factors.
Nevertheless, management expects Personal Care Products to deliver a better performance in the fourth quarter, backed by its brand initiatives and effective promotional strategy. The Zacks Consensus Estimate for sales at this segment is pegged at $2,261 million, reflecting a 0.6% rise from the year-ago figure. The consensus marks for sales at Consumer Tissue and KCP and Other units are $1,547 million and $791 million, depicting 2.8% and 1.5% year-over-year growth, respectively.
Cost Savings Vs Input Cost Inflation
Apart from these factors, Kimberly-Clark is also likely to gain from the successful implementation of its FORCE program, which generated cost savings of $125 million in the third quarter. However, input cost inflation remains a challenge, which the company has been battling for over a year now. For 2017, the company anticipates commodity costs inflation to be marginally higher than its previous estimate of $200-$300 million, primarily due to higher prices for several raw materials, including pulp and polymer resin.
Nonetheless, management remains focused on curtailing discretionary spending during the year. Moreover, currency and lower effective tax rate are expected to favorably impact the bottom line. All said, we expect benefits from these factors and the FORCE program to more than offset rising input costs, and help the company witness earnings growth in the fourth quarter.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Kimberly-Clark is likely to beat bottom-line estimates this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Though Kimberly-Clark carries a Zacks Rank #2, its Earnings ESP of -0.84% makes surprise prediction difficult. Notably, the Most Accurate estimate of $1.54 is pegged a notch lower than the Zacks Consensus Estimate.
Stocks With 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:
Coty Inc. (COTY - Free Report) has an Earnings ESP of +5.14% and carries a Zacks Rank #3.
The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.58% and carries a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Can FORCE Program Drive Kimberly-Clark's (KMB) Q4 Earnings?
Kimberly-Clark Corporation (KMB - Free Report) is slated to release fourth-quarter 2017 results on Jan 23. The question lingering in investors’ minds is, whether this consumer products company will be able to deliver a positive earnings surprise in the quarter to be reported. Well the company has outperformed earnings estimates in three of the past four quarters. Let’s see how things are shaping up prior to this announcement.
Kimberly-Clark Corporation Price and EPS Surprise
Kimberly-Clark Corporation Price and EPS Surprise | Kimberly-Clark Corporation Quote
What to Expect?
The current Zacks Consensus Estimate for the quarter under review is pegged at $1.55, which represents nearly 7% growth from the year-ago period. This estimate has remained stable over the last 30 days. Moreover, analysts polled by Zacks expect revenues of $4,591 million, up about 1% from the year-ago quarter.
Factors at Play
Kimberly-Clark witnessed year-over-year growth in both top and bottom line in the last quarter, driven by higher sales at Consumer Tissue and K-C Professional (KCP) and Other segments, along with robust cost savings from its Focus on Reducing Costs Everywhere (FORCE) program. Sales at the aforementioned segments gained from higher volumes backed by the company’s effective merchandising strategy. This also helped the company to witness marginal growth in organic sales at its overall consumer business, after a 3% drop in the first half of 2017. Region wise, organic sales remained flat in North America, grew 3% in emerging markets, while it dropped by the same rate in developed markets. Softness in the developed markets mainly stemmed from weak diaper sales in South Korea due to a considerably fall in birth rate.
Moving to the company’s Personal Care Products segment, which constituted about 50% of Kimberly-Clark’s total sales, we note that sales remained soft owing to lower volumes as well as net selling prices. Well, lower net selling price remains a concern for the overall company, owing to intense competition and heightened promotional activities. In fact, North America remains particularly challenged due to these factors.
Nevertheless, management expects Personal Care Products to deliver a better performance in the fourth quarter, backed by its brand initiatives and effective promotional strategy. The Zacks Consensus Estimate for sales at this segment is pegged at $2,261 million, reflecting a 0.6% rise from the year-ago figure. The consensus marks for sales at Consumer Tissue and KCP and Other units are $1,547 million and $791 million, depicting 2.8% and 1.5% year-over-year growth, respectively.
Cost Savings Vs Input Cost Inflation
Apart from these factors, Kimberly-Clark is also likely to gain from the successful implementation of its FORCE program, which generated cost savings of $125 million in the third quarter. However, input cost inflation remains a challenge, which the company has been battling for over a year now. For 2017, the company anticipates commodity costs inflation to be marginally higher than its previous estimate of $200-$300 million, primarily due to higher prices for several raw materials, including pulp and polymer resin.
Nonetheless, management remains focused on curtailing discretionary spending during the year. Moreover, currency and lower effective tax rate are expected to favorably impact the bottom line. All said, we expect benefits from these factors and the FORCE program to more than offset rising input costs, and help the company witness earnings growth in the fourth quarter.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Kimberly-Clark is likely to beat bottom-line estimates this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Though Kimberly-Clark carries a Zacks Rank #2, its Earnings ESP of -0.84% makes surprise prediction difficult. Notably, the Most Accurate estimate of $1.54 is pegged a notch lower than the Zacks Consensus Estimate.
Stocks With 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:
The Procter & Gamble Company (PG - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Coty Inc. (COTY - Free Report) has an Earnings ESP of +5.14% and carries a Zacks Rank #3.
The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.58% and carries a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>