Restructuring Plans to Aid Kimberly-Clark (KMB) Q3 Earnings

Kimberly-Clark Corporation KMB is slated to release third-quarter fiscal 2016 results on Oct 22. This consumer products company’s earnings outperformed the Zacks Consensus Estimate by average of 2.3% in the trailing four quarters. Let’s see what’s in store for Kimberly-Clark this time around.

What to Expect?

The Zacks Consensus Estimate for earnings in the third quarter has increased over the past 30 days to $1.81, which suggests an increase of 5.8% from the year-ago period’s reported figure. The consensus mark for revenues is $4,674 million, indicating growth of 2% from the figure reported in the year-ago quarter.

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation price-eps-surprise | Kimberly-Clark Corporation Quote

Factors at Play

Kimberly-Clark’s third-quarter results are likely to reflect the strength of its solid restructuring plans. To this end, the company has been generating savings from its 2018 Global Restructuring Program and Focus on Reducing Costs Everywhere or FORCE Program for a while now. By simplifying supply chain and manufacturing structures, these programs are expected to have generated savings and aided Kimberly-Clark’s profits in the quarter under review.

However, the exit of some low-margin businesses as part of the Global Restructuring Program and currency headwinds hurt the K-C Professional segment sales in the last reported quarter. This trend may have continued in the third quarter. 

This apart, Kimberly-Clark’s third-quarter bottom line may reflect the effects of input cost inflation. Markedly, higher input costs, stemming from greater costs of pulp, and higher raw materials and distribution expenses, have long been troubling the company. In fact, input cost inflation is a concern for several consumer staple companies like Campbell Soup CPB, TreeHouse Foods THS and General Mills GIS, among others.

However, Kimberly-Clark is most likely to have countered the aforementioned hurdles with its effective restructuring plans and key growth pillars. These include focus on improving the core business in the developed markets, enhancing the Personal Care segment in developing and emerging markets, and boosting digital and e-commerce capacities. The company has been progressing well with these objectives, which have been aiding its portfolio and expanding the global business. The effect of these efforts is likely to show on the quarterly results.

What the Zacks Model Unveils

Our proven model shows a beat for Kimberly-Clarkthis earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kimberly-Clark currently carries a Zacks Rank #3, which along with an Earnings ESP of +1.29% makes us reasonably confident of a beat.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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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 Nasdaq, Inc.

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