It has been about a month since the last earnings report for Kimberly-Clark (KMB Quick QuoteKMB - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kimberly-Clark due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Kimberly-Clark Q4 Earnings Beat Estimates, Sales Up Y/Y

Kimberly-Clark reported fourth-quarter 2021 results, with the top line increasing year over year and beating the Zacks Consensus Estimate. The bottom line declined from the year-ago quarter’s reported figure. However, earnings surpassed the consensus mark.

Quarter in Detail

Adjusted earnings came in at $1.30 per share, surpassing the Zacks Consensus Estimate of $1.28. The bottom line declined 23% from $1.69 per share in the year-ago quarter.

Kimberly-Clark’s sales came in at $4,965 million, beating the Zacks Consensus Estimate of $4,928.8 million. The metric advanced 3% year over year. Organic sales rose 3%, with net selling prices rising 2% and product mix sales increasing 1%.

In North America, organic sales in consumer products remained flat year over year, while it grew 2% in the K-C Professional segment. Outside North America, organic sales went up 8% in developing and emerging (D&E) markets. The metric rose 2% across the developed markets.

Adjusted operating profit came in at $611 million, down from $767 million in the year-ago quarter, thanks to a rise in input costs to the tune of $530 million. An increase in pulp and polymer-based materials, distribution and energy costs led to a rise in input costs. The hikes were somewhat offset by organic sales growth, lower other manufacturing costs, reduced marketing, research and general expense as well as cost savings of $115 million and $35 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively.

Segment Details

Personal Care: Sales of $2,632 million increased 12% year over year. Net selling prices improved 4%, volumes rose 5% and product mix increased 2 points. The net effect of the Softex Indonesia buyout and business exits related to the company’s 2018 Global Restructuring Program aided sales by nearly 1%. Sales advanced 12% in North America and 14% in D&E markets. The metric grew 5% across developed markets outside North America, including Australia, South Korea and Western/Central Europe.

Consumer Tissue: Segment sales of $1,559 million fell 10% year over year. Volumes fell 7%, reflecting tough comparison stemming from escalated shipments in North America in the year-ago quarter owing to a spike in demand amid the pandemic. Net selling prices inched down almost 1%. Sales fell 14% in North America, while the metric increased 3% in D&E markets. The metric fell 6% in developed markets outside North America.

K-C Professional (KCP): Segment sales gained 2% to $758 million. Volumes were down 2%. Net selling prices rose 4%. Sales grew 2% in North America, while it increased 5% in D&E markets. The metric dipped 1% in developed markets outside North America.

Other Financial Updates

The company ended the quarter with cash and cash equivalents of $270 million, long-term debt of $8,141 million and total stockholders’ equity of $737 million. Kimberly-Clark generated cash from operating activities of $1,062 million during the three months ended Dec 31, 2021. Management incurred capital expenditures of $273 million. In 2022, the company expects capital spending of $1,000-$1,100 million.

Kimberly-Clark repurchased 0.1 million shares for $7 million in the fourth quarter. In 2022, the company plans to buy back shares worth nearly $100 million. The company approved a quarterly dividend hike of 1.8%. The quarterly dividend will rise to $1.16 per share, up from $1.14 per share paid in 2021. The revised dividend will be paid on Apr 4, 2022, to stockholders of record as of Mar 4, 2022.

The company is on track with the 2018 Global Restructuring Program, which is focused on lowering its structural costs and improving financial flexibility. As part of this initiative, the company exited or divested some low-margin businesses that reflected about 1% of net sales and closed or sold 11 facilities. The program generated annual pre-tax cost savings of $560 million. Management expects cost savings from the FORCE program in the range of $300-$350 million in 2022.

2022 Outlook

Net sales in 2022 are expected to grow 1-2% year over year. Organic sales are expected to increase 3-4%. Unfavorable foreign currency exchange rates are likely to hurt sales by roughly 2%.

Management expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to escalate $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share of $5.60-$6.00.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -12.01% due to these changes.

VGM Scores

At this time, Kimberly-Clark has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kimberly-Clark has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.