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Kimberly-Clark Stock Up 20% YTD: Should You Buy or Hold Tight?
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Kimberly-Clark Corporation (KMB - Free Report) experienced a notable increase in its stock price, registering a 20.3% year-to-date increase. This impressive growth surpasses the Zacks Consumer Products - Staples industry's increase of 4.2%.
Kimberly-Clark's success is mainly due to its strategic shift towards a volume-and-mix growth model. This approach, which leverages advanced technologies and innovative products, aims to boost operational efficiency. By focusing on supply chain integration and divesting from non-core markets, the company streamlined its operations. In addition, KMB's strategic revenue management and cost-saving measures contributed to its strong performance. This enabled it to outperform the broader Consumer Staples sector, which has grown 4.2%, and the S&P 500 Index, which has moved up 14.4% during the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $146.25 yesterday, the KMB stock is inching toward its 52-week high of $149.31, attained on Sep. 5, 2024.
Technical indicators are also supportive of Kimberly-Clark’s strong performance. The stock is trading above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in KMB’s financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Kimberly-Clark’s Sustained Growth Through Strategic Shift
In second-quarter 2024, KMB demonstrated its growing market strength by achieving positive volume-plus-mix growth for the third consecutive quarter. This accomplishment underscores the success of the company's shift to a volume-and-mix-driven growth model. By focusing on advanced technologies and innovative product solutions, the company aligned its strategy with its 2024 objectives and long-term vision. This approach enabled the company to resonate with consumers worldwide and drive consistent growth.
Image Source: Zacks Investment Research
Transforming Operations and Investing in KMB’s Future
Kimberly-Clark is in the midst of a significant transformation aimed at enhancing its growth and operational efficiency. The company’s Wire Our Organization for Growth strategy is central to this effort. This strategy involves reengineering its organizational structure to accelerate growth and improve focus. Part of this transformation includes exiting less promising markets and businesses. For instance, Kimberly-Clark has divested its Personal Protective Equipment business and plans to exit operations in Nigeria, Bolivia, and other private label ventures. Additionally, the company is closing two facilities in the U.K. as part of its sustainability initiatives and to utilize its tissue network better.
A major priority for KMB is optimizing its margin structure. The company is committed to managing input costs to achieve neutral-to-positive Price Net of Cost (PNOC) inflation. This approach allows the firm to leverage productivity gains and invest further in growth while still meeting its financial targets. Innovation remains a cornerstone of Kimberly-Clark’s strategy, with a strong pipeline of new products designed to deliver superior consumer value across its various product lines.
In the first half of 2024, the company made notable strides in reducing costs. It generated approximately $250 million in gross supply chain productivity, which is being reinvested to enhance supply chain capabilities, improve product quality, and strengthen brand propositions. Investments are also being directed toward research and development, brand building and commercial capabilities, all while supporting sustainability goals.
Looking forward, KMB plans to significantly increase its investments in the latter half of the year. The focus will be on advancing product innovations and building world-class capabilities to sustain and build upon its current momentum. By strategically investing in infrastructure and capabilities, the company aims to strengthen its global market position and deliver long-term value to its stakeholders. These efforts position the company to achieve balanced, sustainable growth and capitalize on emerging opportunities in the global market.
Kimberly-Clark Navigating Challenges in a Volatile Market
Kimberly-Clark is grappling with a challenging operating environment marked by shifting consumer behaviors and volatile retail conditions. Persistent issues such as retail inventory destocking and changing consumer spending patterns, particularly in North America, are impacting demand and pricing. Rising inflation and increased manufacturing costs further strain profitability, with hyperinflationary economies exacerbating these pressures.
The company’s international exposure makes it susceptible to currency fluctuations. The strengthening U.S. dollar has affected sales by nearly 5% in second-quarter 2024. Currency headwinds are expected to reduce net sales by about 400 basis points for the year. These factors create a complex and unpredictable business landscape for Kimberly-Clark.
What’s the Next Move for Kimberly-Clark Investors?
Given Kimberly-Clark's impressive recent stock market performance and strategic advancements, the company appears well-positioned for sustained growth. The positive volume-plus-mix performance, operational improvements and robust investment plans are promising. However, ongoing challenges such as inflation, currency fluctuations and volatile market conditions are a persistent risk. Investors should consider holding the stock to assess how effectively Kimberly-Clark navigates these challenges while capitalizing on its growth initiatives. The company currently carries a Zacks Rank #3 (Hold).
Some Solid Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Flowers Foods (FLO - Free Report) .
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.
The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1% and 4.2%, respectively, from the year-ago reported numbers.
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Kimberly-Clark Stock Up 20% YTD: Should You Buy or Hold Tight?
Kimberly-Clark Corporation (KMB - Free Report) experienced a notable increase in its stock price, registering a 20.3% year-to-date increase. This impressive growth surpasses the Zacks Consumer Products - Staples industry's increase of 4.2%.
Kimberly-Clark's success is mainly due to its strategic shift towards a volume-and-mix growth model. This approach, which leverages advanced technologies and innovative products, aims to boost operational efficiency. By focusing on supply chain integration and divesting from non-core markets, the company streamlined its operations. In addition, KMB's strategic revenue management and cost-saving measures contributed to its strong performance. This enabled it to outperform the broader Consumer Staples sector, which has grown 4.2%, and the S&P 500 Index, which has moved up 14.4% during the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $146.25 yesterday, the KMB stock is inching toward its 52-week high of $149.31, attained on Sep. 5, 2024.
Technical indicators are also supportive of Kimberly-Clark’s strong performance. The stock is trading above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in KMB’s financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Kimberly-Clark’s Sustained Growth Through Strategic Shift
In second-quarter 2024, KMB demonstrated its growing market strength by achieving positive volume-plus-mix growth for the third consecutive quarter. This accomplishment underscores the success of the company's shift to a volume-and-mix-driven growth model. By focusing on advanced technologies and innovative product solutions, the company aligned its strategy with its 2024 objectives and long-term vision. This approach enabled the company to resonate with consumers worldwide and drive consistent growth.
Image Source: Zacks Investment Research
Transforming Operations and Investing in KMB’s Future
Kimberly-Clark is in the midst of a significant transformation aimed at enhancing its growth and operational efficiency. The company’s Wire Our Organization for Growth strategy is central to this effort. This strategy involves reengineering its organizational structure to accelerate growth and improve focus. Part of this transformation includes exiting less promising markets and businesses. For instance, Kimberly-Clark has divested its Personal Protective Equipment business and plans to exit operations in Nigeria, Bolivia, and other private label ventures. Additionally, the company is closing two facilities in the U.K. as part of its sustainability initiatives and to utilize its tissue network better.
A major priority for KMB is optimizing its margin structure. The company is committed to managing input costs to achieve neutral-to-positive Price Net of Cost (PNOC) inflation. This approach allows the firm to leverage productivity gains and invest further in growth while still meeting its financial targets. Innovation remains a cornerstone of Kimberly-Clark’s strategy, with a strong pipeline of new products designed to deliver superior consumer value across its various product lines.
In the first half of 2024, the company made notable strides in reducing costs. It generated approximately $250 million in gross supply chain productivity, which is being reinvested to enhance supply chain capabilities, improve product quality, and strengthen brand propositions. Investments are also being directed toward research and development, brand building and commercial capabilities, all while supporting sustainability goals.
Looking forward, KMB plans to significantly increase its investments in the latter half of the year. The focus will be on advancing product innovations and building world-class capabilities to sustain and build upon its current momentum. By strategically investing in infrastructure and capabilities, the company aims to strengthen its global market position and deliver long-term value to its stakeholders. These efforts position the company to achieve balanced, sustainable growth and capitalize on emerging opportunities in the global market.
Kimberly-Clark Navigating Challenges in a Volatile Market
Kimberly-Clark is grappling with a challenging operating environment marked by shifting consumer behaviors and volatile retail conditions. Persistent issues such as retail inventory destocking and changing consumer spending patterns, particularly in North America, are impacting demand and pricing. Rising inflation and increased manufacturing costs further strain profitability, with hyperinflationary economies exacerbating these pressures.
The company’s international exposure makes it susceptible to currency fluctuations. The strengthening U.S. dollar has affected sales by nearly 5% in second-quarter 2024. Currency headwinds are expected to reduce net sales by about 400 basis points for the year. These factors create a complex and unpredictable business landscape for Kimberly-Clark.
What’s the Next Move for Kimberly-Clark Investors?
Given Kimberly-Clark's impressive recent stock market performance and strategic advancements, the company appears well-positioned for sustained growth. The positive volume-plus-mix performance, operational improvements and robust investment plans are promising. However, ongoing challenges such as inflation, currency fluctuations and volatile market conditions are a persistent risk. Investors should consider holding the stock to assess how effectively Kimberly-Clark navigates these challenges while capitalizing on its growth initiatives. The company currently carries a Zacks Rank #3 (Hold).
Some Solid Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Flowers Foods (FLO - Free Report) .
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.
The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1% and 4.2%, respectively, from the year-ago reported numbers.