Strong Earnings Fuel Big Price Move For Kimberly-Clark

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Soft spending due to sluggish job growth in recent months has taken its toll on the consumer staples sector in recent quarters.

Kimberly-Clark ( KMB ) hasn't been immune, but overseas growth and global cost-cutting have offset challenges elsewhere.

On Tuesday, shares gapped up 4% in heavy volume after the maker of Huggies diapers and Kleenex tissue said third-quarter profit rose 7% to $1.44 a share, slightly ahead of the consensus estimate of $1.40. Sales growth was essentially flat for the second straight quarter at $5.26 billion. Stripping out the impact of acquisitions, divestitures and foreign exchange fluctuations, organic sales rose 5%. The company raised its full-year earnings guidance to $5.65 to $5.75 a share from a prior forecast of $5.60 to $5.75. The current Thomson Reuters consensus estimate is $5.72, up 9% from 2012.


Nearly 50% of the company's revenue comes from its Personal Care Products division, which includes diapers and baby wipes. Overall sales fell 1% to $2.4 billion. Sales in North America were flat but fell in Europe because the firm scaled back its presence in the region.

Diaper sales in emerging markets, however, were a bright spot. Sales surged 45% in China, 35% in Russia and 20% in Brazil.

Shares have been under accumulation of late as the stock approaches its all-time high of 106.54. The stock has been consolidating gains since late April. During market uptrends, a shallow, saucer-shaped pattern like the one Kimberly-Clark is forming should be watched because they have a good record of delivering upside breakouts. Keep in mind that a structure like this can often see one last shakeout before a breakout.

Kimberly-Clark appears in today's Dividend Leaders screen because of a consistent track record of earnings and dividend growth. It paid a quarterly dividend of 81 cents a shares on Oct. 2 and currently yields 3.1%.



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: Personal Finance , Investing Ideas

Referenced Stocks: KMB

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