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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers