What happened
Consumer products giant Kimberly-Clark (KMB 0.34%) stock added 13% through the first half of 2017, according to data provided by S&P Global Market Intelligence.
The boost has helped shareholders recover some of ground they lost after the Huggies and Kleenex brand owner underperformed the market by a wide margin in 2016.
So what
Kimberly-Clark hasn't posted a sales rebound this year. In fact, its growth pace is slowing.
Organic sales rose by just 2% in fiscal 2016, the company announced in late January, compared to a 5% gain in 2015. The good news is that Kimberly-Clark still hit its earnings growth target, thanks to aggressive cost cutting. It successfully defended its market position from rivals, too. "While we experienced a challenging economic and competitive environment in 2016," CEO Thomas Falk said in a press release, "our market share positions remained broadly healthy."
Image source: Getty Images.
Its first-quarter report paired more bad news on the growth front with steady earnings gains. Organic sales declined by 1% due to surprising weakness in its core U.S. market. Yet profitability ticked higher, and net income improved by 3% to $563 million.
Now what
Kimberly-Clark in late April lowered its full year outlook; it's now targeting growth of between 1% and 2% rather than the firm 2% that CEO Thomas Falk and his executive team had originally projected. Investors aren't faulting the company for this slowdown, especially since its major peers, including Procter & Gamble and Clorox, are pulling back their forecasts due to the same disappointing industry trends.
While Kimberly-Clark's stock has outperformed these rivals so far this year, it will likely take a rebound in sales growth for shares to see market-beating gains over the long term.
