21 Oct

Will Kimberly-Clark Beat Analysts’ Estimates in Q3?

WRITTEN BY Amit Singh
  • Kimberly-Clark will announce its third-quarter results on Tuesday.
  • The revenue growth rate could accelerate in the third quarter.

Kimberly-Clark (KMB) is scheduled to announce its third-quarter earnings before the markets open on Tuesday. We expect the company to benefit from higher net pricing and a favorable product mix. However, negative foreign exchange rates could continue to play spoilsport.

Growth in organic sales and cost-saving initiatives will likely boost Kimberly-Clark’s margins. Also, input cost pressure could moderate, which could support the margins.

Improve organic sales and margin expansion could continue to drive Kimberly-Clark’s bottom line. The lower outstanding share count might cushion the bottom line. However, the higher tax rate will likely remain a drag and limit the earnings growth rate.

Analysts’ expectations for Kimberly-Clark 

Despite pressure on the top line, Kimberly-Clark beat analysts’ revenue estimates in the last four quarters. In the third quarter, analysts expect Kimberly-Clark to post revenues of $4.65 billion—up 1.4% YoY (year-over-year). Higher net selling prices will likely drive the company’s organic sales and overall top line.

During the last reported quarter, Kimberly-Clark’s top line almost stayed flat. However, organic sales rose 5%, which reflected a 5% growth in pricing and a 1% contribution from the favorable product mix.

Analysts expect the company’s adjusted EPS to be $1.80, which implies growth of 5.3% YoY. Share repurchases and growth in the base business will likely drive the company’s third-quarter earnings. Kimberly-Clark beat analysts’ estimates in the first two quarters of 2019.

In comparison, analysts expect Procter & Gamble’s revenue growth to remain higher than Kimberly-Clark. Procter & Gamble is scheduled to announce its first-quarter results on Tuesday. Analysts expect a 4.4% growth in the company’s revenues. Meanwhile, Procter & Gamble’s bottom-line growth will likely outpace Kimberly-Clark. Analysts expect about an 11% increase in Procter & Gamble’s bottom line.

Colgate-Palmolive’s (CL) third-quarter revenues will likely improve due to higher organic sales. However, the company’s bottom line could stay weak and fall on a YoY basis. Colgate-Palmolive will announce its third-quarter earnings on November 1.

Notably, Kimberly-Clark stock has risen 20.4% year-to-date as of October 18. Meanwhile, analysts’ target price of $140.56 indicates an upside of 2% based on its closing price of $137.22 on October 18.

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