Kimberly Clark Corporation
) is set to report fourth quarter and full year 2012 results on
January 25. Last quarter it posted a 1.5% positive surprise.
Let's see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Kimberly Clark's cost saving initiatives, continued product
innovation drove earnings growth in the third quarter.
Kimberly Clark has been hard hit by the ongoing macroeconomic
challenges and volatility in cost. However the company is trying
hard to combat the difficulty. Its cost saving program; FORCE
(Focused on Reducing Costs Everywhere) is helping it to save
costs through lean manufacturing and supply chain practices.
Kimberly Clark's leadership position in consumer product
categories coupled with recent launch of many new products in the
third quarter like Huggies Little Movers Slip-On diapers, Poise
Hourglass Shape pads, Kleenex Cool Touch facial tissue, and
improved Cottenelle bathroom tissue, added to revenue growth and
market share of the company.
The company will be exiting the diaper category in Western and
Central Europe, with the exception of the Italian market and will
be divesting or exiting some lower-margin businesses in certain
markets, mostly in the consumer tissue segment in order to
improve underlying profitability and focus its resources on its
strongest market positions and growth opportunities. The company
will also streamline its European manufacturing footprint and
administrative organization to align its cost structure with
these strategic decisions. This will help it to improve margins
in the coming quarter.
Our proven model does not conclusively show that Kimberly
Clark is likely to beat earnings this quarter. That is because a
stock needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as shown below.
Negative Zacks ESP
: The Most Accurate estimate stands at $1.33 while the Zacks
Consensus Estimate is higher at $1.36. That is a difference of
Zacks Rank #3 (Hold)
: Kimberly Clark's Zacks Rank #3 (Hold) lowers the predictive
power of ESP because the Zacks Rank #3 when combined with a
negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks #4 and #5 Ranks (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Procter & Gamble Company
), Earnings ESP of +1.80% and Zacks #2 Rank (Buy).
Energizer Holdings Inc.
), Earnings ESP of +1.39% and Zacks #3 Rank (Hold).
Newell Rubbermaid Inc.
), Earnings ESP of +2.38% and Zacks #3 Rank (Hold).
ENERGIZER HLDGS (ENR): Free Stock Analysis
KIMBERLY CLARK (KMB): Free Stock Analysis
NEWELL RUBBERMD (NWL): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
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