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Barclays Downgraded Kimberly-Clark to ‘Equal-Weight’

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Price movement

Kimberly-Clark (KMB) has a market cap of $40.9 billion. It fell 1.5% and closed at $114.64 per share on January 9, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 0.46%, 0.26%, and 0.46%, respectively, on the same day. Kimberly-Clark is trading 0.26% below its 20-day moving average, 0.63% above its 50-day moving average, and 7.4% 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. PSL’s YTD price movement was 0.97% on January 9.

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

  • Procter & Gamble (PG) – $225.9 billion
  • Edgewell Personal Care (EPC) – $4.4 billion

Rating

On January 9, 2017, Barclays downgraded Kimberly-Clark’s rating to “equal-weight” from “overweight.” It also reduced the stock’s price target to $109.0 from $125.0 per share.

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Performance in 3Q16

Kimberly-Clark reported 3Q16 net sales of $4.6 billion—a fall of 2.8% compared to its net sales of $4.7 billion in 3Q15. The fall was due to the impact of foreign currency exchange rates.

Sales from the company’s 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 YoY (year-over-year).

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 YoY rise of 0.66%. Kimberly-Clark’s cash and cash equivalents rose 42.8%, while its inventories fell 9.1% YoY in 3Q16.

Projections

Kimberly-Clark made the following projections for 2016:

  • 4.0% effect of negative foreign currency translation on net sales
  • 3.0% effect of negative foreign currency translation on organic profit
  • 2.0% organic sales growth
  • adjusted EPS of $5.95–$6.05

In the next part, we’ll look at Dr Pepper Snapple (DPS).

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