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Kimberly-Clark Corporation (KMB - Free Report) posted second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. The top line missed the consensus mark and declined year over year.
Despite navigating a dynamic consumer and retail landscape, the company managed to achieve favorable gains in volume and product mix, driven by the introduction of pioneering new products and sustained momentum in productivity. Taking into account strong first-half results, management raised its 2024 earnings outlook.
Quarter in Detail
Adjusted earnings came in at $1.96 per share, surpassing the Zacks Consensus Estimate of $1.68. The bottom line increased 19% year over year, courtesy of higher adjusted operating profit. Reduced net interest and increased equity income were upsides.
Kimberly-Clark’s sales totaled $5,029 million, missing the consensus estimate of $5,101.2 million. The metric dropped 2% compared with the year-ago period’s figure. Unfavorable foreign currency rates affected sales by nearly 5% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.
Organic sales increased 4% on the back of a 2% rise in price stemming from pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina. Product mix and volume were favorable by 2%, with strength across North America, Developing and Emerging (D&E) markets and Developed Markets. Our model suggested a price increase of 3% and a volume increase of 1.1%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
In North America, organic sales inched up 1% year over year, which included 5% growth in Personal Care. These were somewhat offset by a 4% decline in the K-C Professional and a 2% decrease in Consumer Tissue.
Outside North America, organic sales rose 12% in D&E markets. In the developed markets (Australia, South Korea and Western/Central Europe), the metric fell 3%.
The gross margin expanded 290 basis points (bps) to 36.9%. The upside can be attributed to organic net sales growth and gross productivity gains.
The adjusted operating profit increased 16%, despite the adverse impact of unfavorable currency translations to the tune of 7 percentage points stemming from hyperinflationary economies. Excluding currency effects, the increase in adjusted operating profit stemmed from organic growth and enhanced gross productivity, somewhat offset by input cost inflation, investments in supply chain improvements and higher marketing, research and general expenditures.
Segment Details
Personal Care: Segment sales of $2,692 million remained flat year over year. Organic sales rose 8% 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 $1,486 million dropped 4% year over year. The downside was caused by divestitures and business exits. Our model suggested a sales decline of 3.5% in the segment. Organic sales fell 2% year over year. The downside in organic performance resulted from reductions in retailer inventories in North America and price declines in Western Europe.
K-C Professional: Segment sales fell 5% to $841 million due to unfavorable currency rates, divestitures and business exits. Our model suggested a sales decline of 3.9% in the segment. Organic sales were in line with the year-ago quarter’s tally.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $1,163 million, long-term debt of $7,158 million and total stockholders’ equity of $1,281 million.
Cash provided by operations was $1,459 million for six months ended Jun 30, 2024. Management incurred capital spending of $352 million in the same time frame. It returned $965 million to shareholders via dividends and share buybacks.
Image Source: Zacks Investment Research
2024 Guidance
Management still anticipates organic net sales to increase in mid-single-digit percentage. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 400 bps and a 120-bps headwind from divestitures.
The adjusted operating profit is now projected to grow at a mid-to-high teens percentage rate at a constant-currency (cc) basis in 2024. The company projected the metric to grow at a low-teens percentage rate at cc. Adjusted earnings per share are anticipated to rise at a mid-to-high teens percentage rate at cc compared with the previous expectation of a low-teens percentage rate.
This Zacks Rank #3 (Hold) stock has increased 22.1% in the past six months compared with the industry’s growth of 3.4%.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
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Kimberly-Clark (KMB) Tops Q2 Earnings Estimates, Ups FY24 View
Kimberly-Clark Corporation (KMB - Free Report) posted second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. The top line missed the consensus mark and declined year over year.
Despite navigating a dynamic consumer and retail landscape, the company managed to achieve favorable gains in volume and product mix, driven by the introduction of pioneering new products and sustained momentum in productivity. Taking into account strong first-half results, management raised its 2024 earnings outlook.
Quarter in Detail
Adjusted earnings came in at $1.96 per share, surpassing the Zacks Consensus Estimate of $1.68. The bottom line increased 19% year over year, courtesy of higher adjusted operating profit. Reduced net interest and increased equity income were upsides.
Kimberly-Clark’s sales totaled $5,029 million, missing the consensus estimate of $5,101.2 million. The metric dropped 2% compared with the year-ago period’s figure. Unfavorable foreign currency rates affected sales by nearly 5% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.
Organic sales increased 4% on the back of a 2% rise in price stemming from pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina. Product mix and volume were favorable by 2%, with strength across North America, Developing and Emerging (D&E) markets and Developed Markets. Our model suggested a price increase of 3% and a volume increase of 1.1%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
Kimberly-Clark Corporation price-consensus-eps-surprise-chart | Kimberly-Clark Corporation Quote
In North America, organic sales inched up 1% year over year, which included 5% growth in Personal Care. These were somewhat offset by a 4% decline in the K-C Professional and a 2% decrease in Consumer Tissue.
Outside North America, organic sales rose 12% in D&E markets. In the developed markets (Australia, South Korea and Western/Central Europe), the metric fell 3%.
The gross margin expanded 290 basis points (bps) to 36.9%. The upside can be attributed to organic net sales growth and gross productivity gains.
The adjusted operating profit increased 16%, despite the adverse impact of unfavorable currency translations to the tune of 7 percentage points stemming from hyperinflationary economies. Excluding currency effects, the increase in adjusted operating profit stemmed from organic growth and enhanced gross productivity, somewhat offset by input cost inflation, investments in supply chain improvements and higher marketing, research and general expenditures.
Segment Details
Personal Care: Segment sales of $2,692 million remained flat year over year. Organic sales rose 8% 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 $1,486 million dropped 4% year over year. The downside was caused by divestitures and business exits. Our model suggested a sales decline of 3.5% in the segment. Organic sales fell 2% year over year. The downside in organic performance resulted from reductions in retailer inventories in North America and price declines in Western Europe.
K-C Professional: Segment sales fell 5% to $841 million due to unfavorable currency rates, divestitures and business exits. Our model suggested a sales decline of 3.9% in the segment. Organic sales were in line with the year-ago quarter’s tally.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $1,163 million, long-term debt of $7,158 million and total stockholders’ equity of $1,281 million.
Cash provided by operations was $1,459 million for six months ended Jun 30, 2024. Management incurred capital spending of $352 million in the same time frame. It returned $965 million to shareholders via dividends and share buybacks.
Image Source: Zacks Investment Research
2024 Guidance
Management still anticipates organic net sales to increase in mid-single-digit percentage. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 400 bps and a 120-bps headwind from divestitures.
The adjusted operating profit is now projected to grow at a mid-to-high teens percentage rate at a constant-currency (cc) basis in 2024. The company projected the metric to grow at a low-teens percentage rate at cc. Adjusted earnings per share are anticipated to rise at a mid-to-high teens percentage rate at cc compared with the previous expectation of a low-teens percentage rate.
This Zacks Rank #3 (Hold) stock has increased 22.1% in the past six months compared with the industry’s growth of 3.4%.
Key Staple Picks
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.