Why Analysts Have a Bleak Outlook for Kimberly-Clark’s Q1



Kimberly-Clark likely to disappoint investors in Q1

Kimberly-Clark (KMB) is expected to announce its first-quarter results before the markets open on Monday, April 22. Analysts predict that Kimberly-Clark will disappoint investors with its sales and earnings numbers.

We believe that both Kimberly-Clark’s sales and earnings will decline in the first quarter. Currency volatility, persisting challenges in China, and heightened competition in the value segment are expected to hurt Kimberly-Clark’s top line in the first quarter. However, organic sales could benefit from higher pricing.

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Kimberly-Clark’s margins could continue to slide as significant inflation in raw and packaging material costs will likely more than offset the benefits from higher pricing. Softness in sales and pressure on margins are likely to take a toll on Kimberly-Clark’s bottom line in the first quarter. Also, the effective tax rate is expected to be higher compared to the prior year, which in turn will drag earnings lower.

Currency volatility and continued inflation in commodities are expected to hurt the top and bottom lines of other major consumer packaged goods manufacturers. Colgate-Palmolive’s (CL) top and bottom line are expected to decline in the first quarter of 2019. Meanwhile, Procter & Gamble’s (PG) sales and earnings growth rate are expected to stay low.

Stock performance

Kimberly-Clark stock has risen 8.1% on a YTD basis as of April 12. Meanwhile, Procter & Gamble, Colgate-Palmolive, Church & Dwight (CHD), and Clorox (CLX) stock are up 14.3%, 15.5%, 12.4%, and 0.9%, respectively. Given the near-term pressure on sales and margins, the upside in KMB stock seems limited.


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