23 Apr

What Drove Kimberly-Clark’s Q1 Earnings?

WRITTEN BY Amit Singh

EPS exceeds expectations

Kimberly-Clark (KMB) posted better-than-expected earnings in the first quarter of 2019. Kimberly-Clark’s adjusted earnings of $1.66 per share handily surpassed analysts’ estimate of $1.54, driven by an increase in net pricing, a favorable mix, cost savings, and share buybacks. However, earnings declined on a YoY basis, reflecting inflation in commodities and a higher tax rate.

We expect input and logistics cost headwinds to pressure the margins of other CPG companies including Colgate-Palmolive (CL), Procter & Gamble (PG), Clorox (CLX), and Church & Dwight (CHD). Weak margins and adverse currency rates are expected to hurt the earnings of these companies in the coming quarters.

What Drove Kimberly-Clark’s Q1 Earnings?

Ready to put your morning scrolling to use? Sign up for Bagels & Stox, our witty take on the top market and investment news straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

Q1 earnings in detail

Kimberly-Clark’s earnings benefitted from a 4% increase in pricing and a 1% benefit from a favorable product mix. Meanwhile, cost savings and a slight sequential decline in cost of commodities including pulp, recycled fiber, and polymer further supported margins, and in turn, the company’s EPS.

Kimberly-Clark’s adjusted gross margin contracted 30 basis points to 33.5%. Meanwhile, the adjusted operating margin stayed flat at 17.4%. Management stated the higher pricing helped offset the adverse impact of cost headwinds. Kimberly-Clark’s first-quarter earnings benefited from the lower outstanding share count. However, a higher effective tax rate was a 2% drag on its bottom line.

Management reiterated its guidance and expects its adjusted EPS to be in the range of $6.50 to $6.70 in 2019. Currency and input cost headwinds coupled with a planned increase in advertising are likely to hurt the company’s bottom line. However, cost savings, higher pricing, and lower outstanding share count is expected to support earnings.

Latest articles

Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

14 Jun

IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

14 Jun

Why Kimberly-Clark Stock May Stop Rising

WRITTEN BY Amit Singh

Kimberly-Clark (KMB) stock has risen 20.5% this year, boosted by the company’s better-than-expected sales and earnings during its last reported quarter. However, its stock could stop climbing. Here's why.

172.31.16.229