P&G, Kimberly-Clark, or Clorox: Which Personal Products Giant Had the Best Quarter?

Three of the largest personal products companies in the world have just reported quarterly results, so let's find out which one had the best quarter and where we should invest today.

Feb 8, 2014 at 8:30AM

Three of the largest personal products manufacturers in the world, Procter & Gamble (NYSE:PG), Kimberly Clark (NYSE:KMB), and Clorox (NYSE:CLX), recently reported quarterly results. Each report told a similar story in terms of growth, but the results were differentiated enough to crown a champion. Let's break down each report and decide which company had the best quarter and if this is our opportunity to buy.

The American giants 
Procter & Gamble, or P&G, is one of the world's leading consumer-goods companies. It is home to the largest lineup of industry-leading brands; in fact, it is home to 25 billion-dollar brands, including Tide, Gain, Downy, Gillette, Charmin, Pampers, Duracell, and Crest. The company currently operates in 70 countries and its products are available in over 180 countries, serving approximately 4.8 billion people.

Pg Screenshot From Website

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.

Kmb Company Careers Page

Clorox is a leading manufacturer and marketer of consumer and household products. It is home to some of the most popular brands that we use every single day, such as Clorox, Tilex, Kingsford, Pine-Sol, Liquid-Plumr, Burt's Bees, and Hidden Valley; in fact, 90% of Clorox's brands hold the No. 1 or No. 2 market share in their categories.

Clx Facebook Page

The earnings reports 
Procter & Gamble

Second-quarter results for fiscal 2014 were released on Jan. 24 and the results were mixed in comparison with expectations. Here's an overview with a year-over-year comparison:

Metric Reported Expected
Earnings Per Share $1.21 $1.20
Revenue $22.28 billion $22.35 billion
  • Core earnings per share decreased 1%
  • Revenue remained unchanged
  • Organic sales grew 3%
  • Global volume increased 3%
  • Gross profit fell 1% to $11.15 billion
  • Gross margin declined 90 basis points to 50%
  • Other most notable factor: P&G faced several charges related to its restructuring that will eventually result in increased productivity and cost savings

Kimberly Clark

Jan. 24 brought Kimberly Clark's earnings release as well. For the fourth quarter of fiscal 2013 the company beat on both lines. Here's a breakdown and a year-over-year comparison:

Metric Reported Expected
Earnings Per Share $1.44 $1.39
Revenue $5.31 billion $5.28 billion
  • Earnings per share increased 5.1%
  • Revenue remained unchanged
  • Organic sales grew 5%
  • Global volume increased 4%
  • Gross profit rose 19% to $1.81 billion
  • Gross margin expanded 546 basis points to 34.18%
  • Other most notable factor: Kimberly Clark updated investors on the planned spin-off of its health care business; the split is expected to be voted on in the second quarter and completed by the third quarter

Clorox

Second-quarter results for fiscal 2014 were released on Feb. 4 and the reported statistics were mixed in comparison with analysts' estimates. Here's a summary of the results and a year-over-year comparison:

Metric Reported Expected
Earnings Per Share $0.88 $0.91
Revenue $1.33 billion $1.31 billion
  • Earnings per share declined 5.4%
  • Revenue increased 0.4%
  • Global volume rose 1%
  • Gross profit fell 1.1% to $557 million
  • Gross margin declined 61 basis points to 41.88%
  • Other most notable factor: the company still anticipates free cash flow will represent 10% of total sales, which will allow it to continue paying and raising its dividend while repurchasing shares

Outlook on the year 

Procter & Gamble

As a buffer to the better-than-expected earnings results, P&G affirmed its full-year outlook for fiscal 2014 which called for the following results:

Metric Expected Growth
Reported EPS 7%-9%
Core EPS 5%-7%
Net Sales 1%-2%
Organic Sales 3%-4%

This moderate growth is impressive for a company which is restructuring itself. I think this is why the stock rose on the day the company reported, but this was not enough to sustain a rally. Upon completion of the restructuring, Procter & Gamble will likely use its increased free cash flow to raise its dividend and repurchase shares at an accelerated pace. All in all, this is great guidance for P&G.

Kimberly Clark

After the fourth-quarter report brought fiscal 2013 to a close, Kimberly Clark gave investors its outlook for fiscal 2014. Here's what the company expects:

Metric Expected Growth
Earnings Per Share 4%-7.5%
Net Sales (1%)-2%
Organic Sales 3%-5%
Operating Profit 3%-7%
Dividend 2%-4%

In addition, Kimberly Clark noted that it plans to spend $1.3 billion-$1.5 billion on share repurchases. All of this looks great and I believe the highlight is the immense amount of capital that Kimberly Clark will return 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. After the strong earnings beat, this outlook is icing on the cake.

Clorox

In the report, Clorox also updated its full-year guidance for fiscal 2014. The new guidance is lower than its previous guidance:

Metric Updated Outlook Previous Outlook
Earnings Per Share $4.40-$4.55 $4.45-$4.60
Sales Growth 1%-2% 2%-3%

This was not the worst-case scenario when it comes to reduced outlook, but it still is not what investors like to see. The consensus analyst estimates call for earnings per share of $4.54 for the year, so if Clorox can perform to the high-end of its updated expectations it should be fine. With this said, the main thing I want to see from the company is a dividend increase within the next two quarters.

And the winner is...
After comparing quarterly results and outlooks for fiscal 2014, our winner in this three-way matchup is Kimberly Clark. The company has been creating wealth for decades and I believe it is still one of the best investment opportunities in the market even after its run higher. There is plenty of upside in terms of price appreciation for Kimberly Clark and it will return additional capital via its healthy 3% dividend and share repurchases. Procter & Gamble and Clorox are both over 10% below their 52-week highs and they each have dividends above 3.15%, which represents large upside potential. However, they released sub-par reports and guidance.

More great brands that pay even greater dividends
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it’s true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor’s portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Joseph Solitro owns shares of The Clorox Company. The Motley Fool recommends Kimberly Clark and Procter & Gamble. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

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.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

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. The show is also heard weekly on dozens of 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. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers