Kimberly Clark (KMB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Kimberly-Clark's third quarter 2014 earnings of $1.61 per share exceeded the Zacks Consensus Estimate of $1.54 by 4.5% and grew 11.8% from the year-ago figure of $1.44 per share. Earnings were boosted by organic sales growth, cost savings and lower share count owing to share buybacks, which made up for increased input costs, currency headwinds, higher tax rate and lower net income from equity companies. Organic sales grew 4% backed by higher sales volume and selling prices. We are encouraged by the company's regular innovations, growth initiatives and a strong international presence that make the stock attractive. However, the company expects higher input costs in the year end, which may hurt margins. Nevertheless, after the company's spin-off of its health care segment, the company will be able to focus on its core consumer and professional brands. We therefore prefer to remain on the sidelines with a Neutral recommendation.

Overview:

Incorporated in Delaware in 1928, Kimberly-Clark Corporation (KMB) is principally engaged in the manufacture and marketing of a wide range of health and hygiene products around the world. Most of these products are made from natural or synthetic fibers using advanced technologies in fiber, non-wovens and absorbency. The company sells its products to supermarkets mass merchandisers drugstores warehouse clubs variety and department stores retail outlets manufacturing, lodging, office building, food service, and health care establishments and high volume public facilities.

Based on product grouping, the company conducts its operations in four business segments namely Personal Care, Consumer Tissue, K-C Professional & Other and Health Care.

The Personal Care segment includes products like disposable diapers, training and youth pants, and swim pants baby wipes feminine and incontinence care products under brands, such as Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend and Poise.

The Consumer Tissue segment includes bathroom tissue, paper towels, napkins and related products for household use under brands such as Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Hakle and Page.

The K-C Professional & Other segment consists of facial and bathroom tissue, paper towels, napkins, wipers and a range of safety products under Kimberly-Clark, Kleenex, Scott, WypAll, Kimtech, KleenGuard, Kimcare and Jackson brands.

The Health Care segment consists of disposable health care products, such as surgical drapes and gowns, sterilization wrap, face masks, exam gloves, digestive health and, respiratory products, pain management products and other disposable medical products under Kimberly-Clark, Ballard, ON-Q and other brand names.

On Nov 15, the board of directors of Kimberly-Clark proposed a spin-off of its health care business in order to focus on its consumer and professional brands. The spinoff process is on track and is expected to be complete on Nov 1, 2014. Post spin-off, the health care business will become a separate publicly traded company called Halyard Health.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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