Will Kimberly-Clark Stock Benefit from 3Q17 Earnings?
3Q17 to remain soft
Consumer product manufacturers have been witnessing moderating category growth, especially in the US (SPY), which has affected their top-line performance in the past several quarters. Moreover, the trend is likely to continue as soft demand, increased competition, and lower pricing could hurt the financials of these companies. Besides sales deleverage, increasing commodity costs are likely to hurt the company’s margins.
As for Kimberly-Clark (KMB), analysts expect the company to report marginal sales and earnings growth, driven by new product launches and higher cost-savings. However, low demand and margin headwinds are expected to remain a drag on the company’s financials.
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Kimberly-Clark underperformed peers
As of October 11, 2017, Kimberly-Clark stock is up 3.3% on a YTD (year-to-date) basis, underperforming its peers significantly. During the same time, Colgate-Palmolive (CL), Clorox (CLX), Procter & Gamble (PG), and Church & Dwight (CHD) stock saw growth of 14.2%, 8.8%, 8.8%, and 7.3%, respectively. The S&P 500 Index (SPX-INDEX) rose 14.1%.
As the graph shows, Kimberly-Clark stock witnessed a strong uptrend in the first half of the year in anticipation of improved sales and margins. However, soon after the company posted dismal 2Q17 results, investors dumped the stock on fears of potential risk to its earnings.
In this series, we’ll focus on what analysts expect for Kimberly-Clark’s upcoming quarter. We’ll also analyze the company’s sales, margins, and earnings trends.