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How Did Kimberly-Clark Perform in 3Q16?

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Price movement

Kimberly-Clark (KMB) has a market cap of $40.8 billion. It fell 4.7% to close at $113.91 per share on October 24, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -5.6%, -10.1%, and -8.6%, respectively, on the same day. KMB is trading 7.1% below its 20-day moving average, 8.6% below its 50-day moving average, and 11.1% below its 200-day moving average.

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Related ETF and peers

The PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invests 3.1% of its holdings in Kimberly-Clark. The ETF tracks an index of US consumer cyclical firms selected and weighted by price momentum. The YTD price movement of PSL was -0.33% on October 24.

The market caps of Kimberly-Clark’s competitors are as follows:

  • The Procter & Gamble Company (PG): $226.1 billion
  • Edgewell Personal Care Company (EPC): $4.5 billion

Performance of KMB in 3Q16

Kimberly-Clark reported 3Q16 net sales of $4.6 billion, a fall of 2.8% compared to net sales of $4.7 billion in 3Q15 due to the impact of foreign currency exchange rates. Sales from the personal care, consumer tissue, and K-C professional segments fell 1.9%, 3.7%, and 2.9%, respectively, in 3Q16 compared to 3Q15. The company’s gross profit margin and operating margin rose by 70 basis points and 170 basis points, respectively, in 3Q16 compared to the prior-year period.

The company’s net income and EPS (earnings per share) rose to $550.0 million and $1.52, respectively, in 3Q16 compared to $517.0 million and $1.41, respectively, in 3Q15. It reported adjusted EPS of $1.52 in 3Q16, a rise of 0.66% compared to 3Q15.

KMB’s cash and cash equivalents rose 42.8%, and its inventories fell 9.1% in 3Q16 compared to 4Q15. Its current ratio rose to 0.92x in 3Q16 compared to 0.85x in 4Q15.

During 3Q16, the company repurchased 1.7 million shares worth $225 million.

Projections

The company has made the following projections for fiscal 2016:

  • It expects the effect of negative foreign currency translation on net sales and organic profit of 4% and 3%, respectively.
  • It expects organic sales growth of 2%.
  • It expects adjusted EPS in the range of $5.95 to $6.05.
  • It expects share repurchases of $750 million.

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