Kimberly Clark Corporation
) is set to report second quarter 2013 results on Jul 22. Last
quarter it posted a 10.5% positive surprise. Let's see how things
are shaping up for this announcement.
Factors to Consider This Quarter
Kimberly Clark's lower commodity costs and continued product
innovation is expected to drive earnings in the second quarter.
The company is also well positioned overseas and its expanded
presence in key emerging markets will generate profits in the
quarter. Lower share count owing to share buybacks will help
boost earnings in the quarter.
Kimberly Clark's restructuring and cost savings initiatives
have helped reduce costs, thus reflecting higher operating
profit. Under the pulp and tissue restructuring program, the
company has already exited certain non-strategic products and
transferred some production to lower-cost facilities in order to
improve overall profitability and returns.
The company is expected to sell one such facility in the
second quarter of 2013. Kimberly-Clark anticipates operating
profit to increase by at least $75 million in 2013 and at least
$100 million in 2014.
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 #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 $1.38 while the Zacks
Consensus Estimate is higher at $1.39. 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 Rank #4 and #5
(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 in the consumer staples sector
that can be considered as our model shows that they have the
right combination of elements to post an earnings beat this
Kraft Foods Group Inc
), Earnings ESP of +5.97% and Zacks Rank #2 (Buy).
The J.M. Smucker Co.
), Earnings ESP of +2.52% and Zacks Rank #2 (Buy).
Tyson Foods Inc.
), Earnings ESP of +8.62% and Zacks Rank #2 (Buy).
KIMBERLY CLARK (KMB): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
SMUCKER JM (SJM): Free Stock Analysis Report
TYSON FOODS A (TSN): Free Stock Analysis
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