Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Jim Crumly - Apr 22, 2019 at 4:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On a lackluster day for Wall Street, Kimberly-Clark posted a profit surprise, but Intuitive Surgical fell after reporting earnings.

Stocks drifted mostly sideways in low volume Monday as investors looked forward to some closely watched earning reports this week. The Dow Jones Industrial Average (^DJI -0.21%) closed down and the S&P 500 (^GSPC -0.37%) posted a small gain. A 2.6% jump in the price of crude oil boosted the energy sector.

Today's stock market

Index Percentage Change Point Change
Dow (0.18%) (48.49)
S&P 500 0.10% 2.94

Data source: Yahoo! Finance.

As for individual stocks, Kimberly-Clark (KMB 0.56%) reported falling revenue and profit but managed to beat expectations, while Intuitive Surgical (ISRG -0.84%) posted a disappointing profit.

Colorful montage of a stock graph and columns of numbers.

Image source: Getty Images.

Kimberly-Clark beats expectations in a tough environment

Price increases and cost controls helped Kimberly-Clark beat expectations for its first quarter, and shares jumped 5.4%. Net sales fell 2.1% year over year to $4.63 billion and adjusted earnings per share dropped 2.9% to $1.66. Analysts were expecting the company to earn $1.54 per share on sales of $4.53 billion.

Currency losses posed a 5% headwind to the company, so organic sales growth was 3%, led by 5% organic growth in personal care, the company's largest segment with $2.3 billion in sales. Sales in the consumer tissue business were $1.5 billion, with a 6% decrease in volumes canceling out 6% in net price increases for flat organic growth. Overall, the company had a 2% decline in volume with a 4% increase in pricing.

Kimberly-Clark saw $135 million of input cost increases, which was part of the reason why gross margin fell 30 basis points to 33.5%. The company was able to find $115 million in cost savings, keeping the operating profit margin steady at 17.4% after it dropped significantly last quarter.

Kimberly-Clark maintained its full-year outlook for 2% organic sales growth and EPS between $6.50 and $6.70.

Intuitive Surgical misses on profit 

Robotic surgery specialist Intuitive Surgical missed profit expectations when it reported first-quarter results late last week as customers shifted from purchasing robots to leasing them, and shares fell 7%. Revenue increased 14.9% to $974 million, about what Wall Street was expecting. Non-GAAP EPS rose 7% to $2.61, below the analyst consensus of $2.70.

Worldwide surgical procedures, which drive recurring revenue from disposable supplies, increased 18%. The company shipped 235 systems compared with 185 in the period a year ago, contributing to 13% growth in the installed base.

What hurt profit for Intuitive was an increase in the proportion of trade-ins and a shift from ownership to leasing for a growing proportion of its customers. Trade-ins were used for 36% of system sales in the quarter, compared with 31% in Q1 last year. Lease transactions represented 33% of total placements, an increase from 29% last quarter and 23% in the period a year ago.

The trend shift to leasing creates a future source of recurring revenue for Intuitive Surgical and reduces the volatility of systems revenue, but it also reduces profit in the current period, which is what investors fixated on today.

Jim Crumly owns shares of Intuitive Surgical. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool is short shares of Kimberly-Clark. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
$236.36 (-0.84%) $-2.01
Kimberly-Clark Corporation Stock Quote
Kimberly-Clark Corporation
$136.24 (0.56%) $0.76
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,689.39 (-0.21%) $-71.66
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,264.48 (-0.37%) $-15.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.