Back to top

Image: Bigstock

Will Saving Efforts Drive Kimberly-Clark's (KMB) Q2 Earnings?

Read MoreHide Full Article

Kimberly-Clark Corporation (KMB - Free Report) is slated to release second-quarter 2019 results on Jul 23. The company’s earnings surpassed estimates in three out of the trailing four quarters, the average being 2.1%. Let’s see how things are placed for this well-known personal care products company’s upcoming earnings release.

Savings and Restructuring Efforts Bode Well

Through programs like the Global Restructuring and Focus on Reducing Costs Everywhere (or FORCE), Kimberly-Clark is maintaining a strict control on costs. These plans mainly focus on simplifying supply chain and providing greater flexibility to undertake growth-oriented investments. Management expects these plans to yield savings worth $400-$450 million in 2019, which is likely to support the company’s performance in the second quarter.

Additionally, we note that management introduced the K-C Strategy 2022 earlier in 2019 to ensure continued effectiveness of FORCE and Global Restructuring plans. To top it, the strategy concentrates on strengthening brand portfolio, boosting presence in the developing markets, undertaking efficient capital allocation as well as enhancing digital and e-commerce capacities. These efforts are expected to drive results in the upcoming quarterly announcement.

Headwinds Likely to Dampen Q2

Although the aforementioned factors are encouraging, there are significant roadblocks in Kimberly-Clark’s path. Well, higher input costs are one such concern. Markedly, inflationary trends for pulp and other raw materials are exerting pressure on gross margins and operating profits. Management expects input cost inflation for 2019 in the range of $300-$400 million, which mars expectations for the impending quarter. Speaking of costs, increased advertising expenditures are also a worry.

Additionally, Kimberly-Clark has been witnessing unfavorable impacts from foreign currency translations. Persistence of adverse currency rates is likely to be a drag in the yet-to-be reported quarter.  

Kimberly-Clark Corporation Price, Consensus and EPS Surprise

 

 

Estimates Picture

The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $4,589 million, indicating a drop of 0.3% year over year.

Nevertheless, the consensus mark for earnings has improved by 2 cents in the past 30 days, which is currently stable at $1.63. The figure suggests an improvement of 2.5% from the year-ago quarter’s level.

What Does the Zacks Model Say?

Our proven model shows that Kimberly-Clark is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Kimberly-Clark carries a Zacks Rank #2, which along with an Earnings ESP of +0.10%, makes us reasonably confident of a beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat Earnings Estimates

Estee Lauder (EL - Free Report) has an Earnings ESP of +6.58% and a Zacks Rank #3.

Lamb Weston Holdings (LW - Free Report) has an Earnings ESP of +2.31% and a Zacks Rank #3.

Philip Morris International (PM - Free Report) has an Earnings ESP of +0.38% and a Zacks Rank #3.

Radical New Technology Creates $12.3 Trillion Opportunity

Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.

Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.

See the 7 breakthrough stocks now>>

Published in