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This Could Hurt Kimberly-Clark’s EPS


Jun. 14 2019, Updated 3:06 p.m. ET

What could hurt Kimberly-Clark’s EPS

Kimberly-Clark (KMB) beat Wall Street’s earnings estimate in the previous quarter on the back of higher net pricing, cost and productivity savings, and share repurchases. However, its earnings fell YoY (year-over-year), reflecting raw material and packaging cost inflation and a higher adjusted effective tax rate.

We expect soft volumes, input cost headwinds, and higher tax to continue to hurt Kimberly-Clark’s bottom line in the coming quarters. A planned increase in advertising could also pressure its earnings.

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However, commodity inflation could continue to moderate as it did in the first quarter of 2019, easing pressure on Kimberly-Clark’s gross margins. Higher net price realization, cost and productivity savings, and share repurchases could also cushion its adjusted earnings this year. Whereas Procter & Gamble’s, Church & Dwight’s (CHD), and Colgate-Palmolive’s (CL) bottom lines could also be impacted by higher raw material, packaging, and logistics costs, they could be supported by productivity savings, price restructuring, and share repurchases.

Analysts’ estimates

Wall Street expects Kimberly-Clark’s bottom line to improve slightly YoY in the coming quarters, and by low single digits this year. They expect it to grow by mid-single digits in 2020.


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