Why Kimberly-Clark’s 3Q17 Results Could Be Disappointing

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Why Kimberly-Clark’s 3Q17 Results Could Be Disappointing PART 2 OF 5

Will Kimberly-Clark Exceed 3Q17 Earnings Estimates?

Here’s what analysts expect

Kimberly-Clark (KMB) will report its 3Q17 earnings results on Monday, October 23. Wall Street analysts expect Kimberly-Clark to post earnings of $1.54 per share, representing YoY (year-over-year) growth of 1.3%. Analysts project the company’s bottom line to benefit from improved sales on the back of new and renovated product launches and cost-saving initiatives.

Will Kimberly-Clark Exceed 3Q17 Earnings Estimates?

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Factors to impact Kimberly-Clark’s earnings

Kimberly-Clark’s earnings are likely to benefit from the company’s focus on reducing costs through its FORCE (Focused on Reducing Costs Everywhere) program. Meanwhile, a slight improvement in volumes, a lower effective tax rate, and share repurchases could further cushion the company’s EPS (earnings per share).

However, inflation in commodity prices, a category slowdown, and a planned increase in marketing spending to support new product launches could restrict the company’s earnings growth. Plus, lower pricing due to the increased competitive activity could further pressure the bottom-line growth.

Notably, during the last reported quarter, Kimberly-Clark’s EPS took a hit from the rise in input costs and soft volumes in the US (SPY). Meanwhile, lower pricing in several markets further dented the margins and in turn, the EPS.

In comparison, analysts project Procter & Gamble to see growth of about 4% in its EPS for the upcoming fiscal 1Q18. The company’s EPS is likely to gain from the incremental productivity savings and lower costs. Besides, reduction in share count could further support the EPS growth.

Moreover, Colgate-Palmolive’s (CL) earnings are expected to benefit from increased demand in emerging markets, cost reductions, and higher pricing. Also, Clorox (CLX) is projected to report higher EPS growth thanks to its strong sales growth.


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