A month has gone by since the last earnings report for Kimberly-Clark (KMB Quick QuoteKMB - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.

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

Kimberly-Clark Q4 Earnings Lag Estimates, Inflation Hurts

Kimberly-Clark posted drab fourth-quarter 2023 results. Adjusted earnings came in at $1.51 per share, missing the Zacks Consensus Estimate of $1.53. The bottom line fell 2% year over year, mainly due to hyperinflationary economies and increased taxes. These were somewhat countered by gross profit expansion.

Kimberly-Clark’s sales totaled $4,970 million missing the consensus estimate of $4,985.8 million. The metric remained flat compared with the year-ago period’s figure. Organic sales increased 3% on the back of a 2% rise in price stemming from ongoing revenue growth management programs and a 1% positive product mix. Volumes remained unchanged from the year-ago quarter’s levels. Unfavorable foreign currency rates affected sales by nearly 2% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.

In North America, organic sales rose 3% year over year, which included 5% growth in Personal Care, a 3% increase in Consumer Tissue. These were somewhat offset by a 3% decline in the K-C Professional. Outside North America, organic sales rose 5% in developing and emerging markets. In the developed markets (Australia, South Korea and Western/Central Europe) the metric inched up 1%.

The gross profit increased 7%, which includes $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in reduced input costs. The gross margin expanded 210 basis points (bps) to 34.9%. The upside can be attributed to increased net revenue realization, cost savings and lower input costs. These were somewhat offset by adverse impacts from unfavorable currency rates and increased other manufacturing costs. Our model suggested a gross margin expansion of 100 bps to 33.8%.

The operating profit fell 6% to $670 million, thanks to unfavorable currency impacts. Planned increases in marketing, research and general expenses and increased incentive compensation levels were a concern. Kimberly-Clark’s operating margin came in at 13.5%. Our model suggested an operating margin of 14.5%.

Segment Details

Personal Care: Segment sales of $2,602 million inched up 2% year over year, surpassing our estimate of 1.6% growth. Organic sales rose 6% on a favorable price, mix and volumes. Management highlighted that innovation, strong commercial execution and better supply trends led to volume growth.

Consumer Tissue: Segment sales of $1,540 million dropped 1% year over year. Our model suggested a sales decline of 1.3% in the segment. Organic sales remained flat year over year, reflecting price gains of 1% mitigated by 1% volume decline.

K-C Professional: Segment sales fell 3% to $816 million in comparison. Organic sales inched down 1%. Favorable product mix and revenue realization were offset by reduced volumes. The company’s strategic investments continue to better consumer experiences and demand in the unit.

Other Financial Updates

Kimberly-Clark ended the quarter with cash and cash equivalents of $1,093 million, long-term debt of $7,417 million and total stockholders’ equity of $1,068 million. Cash provided by operations was $3.5 billion for 2023. Management incurred capital spending of $766 million in the same time frame.

Kimberly-Clark concluded share repurchases of 1.8 million shares for $225 million during 2023. It returned $1.8 billion to shareholders via dividends and share buybacks. In a separate press release, Kimberly-Clark announced a 3.4% quarterly dividend hike to reach $1.22 per share. The increased dividend will be paid on Apr 2, 2024, to shareholders record as of Mar 8, 2024. This marks the company’s 52nd consecutive year of dividend hike.

2024 Guidance

Management anticipates organic net sales to increase low-to-mid single digit percentage. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 300 bps and a 60bps headwind from the Brazil Tissue divestiture. Adjusted operating profit is projected to grow at a high single-digit to low double-digit rate on a constant-currency (cc) basis in 2024. Adjusted earnings per share (EPS) is anticipated to grow at high single-digit rate on a cc basis.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -14.59% due to these changes.

VGM Scores

Currently, Kimberly-Clark has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. 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. Notably, Kimberly-Clark has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.