Kimberly Clark Corporation
) is set to report second quarter 2014 results on Jul 22. Last
quarter it posted in-line results. Let's see how things are shaping
up for this announcement.
Factors to Consider this Quarter
Kimberly-Clark's cost saving initiatives, lower selling
expenses, and continued product innovation have been driving
earnings in the past five quarters and made up for increased input
costs and currency headwinds. The company also achieved higher
organic sales on the back of volume growth and better pricing in
all these quarters. We expect these positives to drive earnings in
the second quarter of 2014 as well.
Investors are encouraged by the company's initiatives to control
costs through its FORCE program and a restructuring initiative,
which are likely to improve underlying profitability and return on
invested capital at its consumer tissue and K-C Professional
segments. Profits of these two segments have been declining for
many years. Kimberly Clark's restructuring and cost savings
initiatives helped reduce costs and led to higher operating profit
in both 2012 and 2013. The company is also well positioned overseas
and expanded its presence in key emerging markets through the K-C
International segment in the past several quarters.
However, the macroeconomic headwinds including lower consumer
spending patterns stemming from an unfavorable macroeconomic
environment and adverse currency rates persist. The rise in input
prices also has a direct impact on the company's profits.
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
and a Zacks Rank of #1, 2 or 3 for this to happen. That is
not the case here as you will see below.
ESP for Kimberly-Clark is 0.00% as both the Most Accurate Estimate
and Zacks Consensus Estimate stand at $1.49 per share.
Zacks Rank #3 (Hold):
Kimberly-Clark's Zacks Rank #3 when combined with an ESP of 0.00%
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the consumer staples sector that have both a
positive earnings ESP and a favorable Zacks Rank are:
Dr Pepper Snapple Group, Inc.
), with Earnings ESP of +3.30% and a Zacks Rank #3.
The Coca-Cola Company
), with Earnings ESP of +4.76% and a Zacks Rank #3.
Energizer Holdings, Inc.
), with Earnings ESP of +1.29% and a Zacks Rank #3.
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