Kimberly-Clark Q4 Earnings: Can KMB Hit Its $1.69 EPS Target?

in EARNINGS/INVESTING IDEAS by

Kimberly-Clark Corporation (NYSE:KMB) is scheduled to report Q4 earnings results on January 23, 2020, before markets open for trading.

The company is expected to report earnings of $1.69/share on revenue of $4.547 billion. The consensus earnings per share (EPS) of $1.69/share is based on a poll of 13 analysts and represents a growth of 5.6% over the same quarter last year when the company reported earnings of $1.60/share.

The revenue forecast of $4.547 billion based on a poll of 10 analysts implies a year-over-year (YoY) decline of -0.5%. Last year the company reported $4.569 billion in revenue for the quarter.

Expected to report EPS growth of $0.09/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $4,547.31 $4,569.00 -0.5%
EPS $1.69 $1.60 5.6%

In recent years, Kimberly-Clark has increasingly relied on emerging markets to drive sales. Emerging markets today account for about one-third of company sales. Bullish analysts remain optimistic that the company’s growth markets will continue to benefit from rising disposable incomes and favorable demographics. For example, diaper consumption in developing markets is currently at one diaper per day, significantly below the five diapers per day for customers in developed markets. The chart below depicts KMB’s sales and gross profit margin over the last decade.


NYSE:KMB Fundamentals Chart
Source: Finbox

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Kimberly-Clark for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.80 $1.84 2.2% Beat
Q2, 2019 $1.62 $1.67 3.1% Beat
Q1, 2019 $1.55 $1.66 7.1% Beat
Q4, 2018 $1.66 $1.60 -3.6% Missed
Q3, 2018 $1.64 $1.71 4.3% Beat
Q2, 2018 $1.57 $1.59 1.3% Beat
Q1, 2018 $1.69 $1.71 1.2% Beat
Q4, 2017 $1.54 $1.57 1.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by falling by -3.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $139.19 $134.29 -3.5% Decline
2019-07-23 $134.26 $134.65 0.3% Increase
2019-04-22 $123.55 $125.62 1.7% Increase
2019-01-23 $115.23 $111.44 -3.3% Decline

Fundamentals And Technical Analysis

Kimberly-Clark is currently trading at $144.59/share, up 0.1% for the day. The company is trading at approximately 99.9% of its 52-week high of $144.74/share. The company’s stock price is up 7.7% since the last earnings report and up 2.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 77.18 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:KMB Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 24.0x and a forward P/E multiple of 20.9x. Kimberly-Clark’s current share price also implies a price-to-book (P/B) multiple of -351.3x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $144.59
P/E Ratio 24.0x
P/E Ratio (Fwd) 20.9x
PEG Ratio 5.0
Total Debt to Capital (%) 14.1%
Levered Free Cash Flow $1.583 billion
Enterprise Value / EBITDA 14.8x

Source: Finbox

Company Profile: Kimberly-Clark Corporation

Kimberly-Clark Corporation is a large-cap stock with a market capitalization of $49.535 billion and a total enterprise value of $57.547 billion. The company operates in the Consumer Staples sector and the Household Products industry.

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional.

The Personal Care segment offers disposable diapers, training and youth pants, swim pants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise, and other brand names.

The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins, and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve, and other brand names.

The K-C Professional segment offers wipers, tissues, towels, apparel, soaps, and sanitizers under the Kleenex, Scott, WypAll, Kimtech, and KleenGuard brands. The company sells household use products directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety, and department stores, and other retail outlets, as well as through other distributors and e-commerce; and away-from-home use products directly to manufacturing, lodging, office building, food service, and public facilities, as well as through distributors.

Kimberly-Clark Corporation was founded in 1872 and is headquartered in Dallas, Texas.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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