Kimberly-Clark is Rallying Following Better-Than-Expected Earnings

One of the largest companies in the world, Kimberly-Clark, just reported fourth-quarter results. Let's take a look and see what the quarter held.

Jan 25, 2014 at 8:30AM

One of the world's largest companies, Kimberly Clark (NYSE:KMB), has just released fourth-quarter earnings that left analyst estimates in the dust. These results have caused the stock to spike over 4.5% in the day's trading and could push it much higher. Let's take a look at the report and see if we should join the market and buy or if we should wait for the stock to come down a bit.

The personal products giant
Kimberly Clark is one of the largest personal-products companies in the world. Its brands include Kleenex, Cottonelle, Depend, Huggies, Kotex, Scott, and numerous others, which are said to serve over a billion people each day. Kimberly Clark employs about 57,000 people in 61 countries and its products are currently available in more than 175 countries.

Screen Shot

The report
The fourth-quarter report for fiscal 2013 was released before the market opened on Friday. The results beat expectations on both the top and bottom lines and looked like this:

Metric Reported Expected
Earnings Per Share $1.44 $1.39
Revenue $5.31 billion $5.28 billion

Earnings per share increased 5.1% and revenue remained flat year-over-year, as organic sales grew a strong 5%. Operating profit rose 5% to $836 million, driven by the operating margin expanding 90 basis points, as a direct result of cost savings from its FORCE program; FORCE stands for "Focused on Reducing Costs Everywhere" and that is exactly what the program has been doing. Kimberly Clarks CEO, Thomas Falk, summed up the quarter perfectly when he stated,"Our fourth quarter results capped off another year of excellent performance for Kimberly Clark." 

Expectations for 2014
In the report, Kimberly Clark also gave its outlook for fiscal 2014. Here are the company's projections:

Metric Expectations
Earnings Per Share $6.00-$6.20
Net Sales Growth  (1%)-2%
Operating Profit Growth 3%-7%
Dividend Growth 2%-4%
Share Repurchases $1.3 billion-$1.5 billion

These projections call for earnings per share to increase 4%-7.5% from the $5.77 earned in fiscal 2013. Earnings growth is key, but I believe the highlight of this outlook is the immense amount of capital that will be returned to shareholders; the dividend raise will keep the yield above 3% for the year, depending on how high the shares rise, and share repurchases will reduce the float to drive earnings per share higher. As a side note, the dividend increase to come will be the 42nd consecutive year with a raise, continuing the company's impressive streak. Strong earnings paired with great guidance is what makes Kimberly Clark one of the best companies in the market today.

Another giant due out soon
One of Kimberly Clark fellow titans of the personal and household products industry, Clorox (NYSE:CLX), is about to report a quarter of its own. Second-quarter results for fiscal 2014 are due out before the market opens on Feb. 4 and he current expectations call for declines on both the top and bottom lines:

Metric Expected Year Ago
Earnings Per Share $0.91 $0.93
Revenue $1.32 billion $1.325 billion

These estimates call for earnings to decline 2.1% and revenue to fall 0.4% from the same period a year ago. The company's first quarter, in which earnings and revenue rose just 2%, was far from impressive, but I do not believe Clorox will report negative numbers year-over-year; I expect both earnings and revenue to at least be in the range of unchanged to 1% growth. I am especially bullish after seeing Kimberly Clark and Proctor & Gamble exceed earnings expectations, since all three have similar consumer bases. Clorox is arguably the best option in the industry behind Kimberly Clark, so investors could take their pick and do no wrong.

The Foolish bottom line
Kimberly Clark has proven once again that it is one of the best companies in the world. Its earnings exceeded expectations and the company's outlook is pointing toward another strong year in 2014. The stock has spiked higher following the report, so I do not think investors should chase it; however, if it has a steep decline or shows any weakness in the coming weeks, you should strongly consider adding it to your portfolio. 

The Motley Fool's Top Stock for 2014
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Joseph Solitro has no position in any stocks mentioned. The Motley Fool recommends Kimberly Clark. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information