Investors have been happy with the last few earnings reports from Kimberly Clark (NYSE:KMB), which have shown that it can pass along higher costs to customers even though demand trends remain weak. Yet for that rebound to stretch deeper into 2019, the consumer staples giant will need to demonstrate an ability to boost sales volumes, too, given that rival Procter & Gamble (NYSE:PG) is seeing some of its fastest growth in years right now.

The two companies are set to report quarterly earnings over the next few weeks, with Kimberly Clark stepping up first. Below, we'll take a closer look at what investors can expect from that announcement, slated for July 23.

A mother shops for diapers.

Image source: Getty Images.

Walking the line

With costs spiking on everything from key inputs like pulp and plastic, to transportation and manufacturing, the biggest challenge lately has been passing along higher prices without sacrificing growth. Kimberly Clark did a decent job at walking that fine line in the fiscal first quarter. Yet its 3% organic sales boost was driven entirely by price increases as volume fell about 2%. Procter & Gamble fared much better in early 2019, as its 5% sales uptick came from a balance of higher prices and more unit sales across its portfolio.

On Tuesday, investors will be looking for signs that Kimberly Clark is benefiting from the same improving demand trends that are helping P&G log its fastest growth in years. Organic sales gains higher than 2% would be strong evidence of that rebound, especially if the boost comes from a mix of rising prices and volumes.

Cost cuts

Its second main priority for 2019 is lowering costs, and CEO Mike Hsu and his team got off to a strong start there in the first quarter. Costs fell by $115 million, which put it on pace to perhaps exceed its goal of $400 million in savings for the year. Combined with higher prices, this success allowed management to direct more cash toward advertising while holding profitability steady.

Still, investors will want to see the company improve on its current operating margin of roughly 17%, especially since P&G's comparable figure tops 20%. Success in this arena gives the company maximum flexibility to support its brands with more marketing and to deliver more cash returns directly to shareholders through stock repurchases and dividends.

The second-half outlook

With half of its fiscal year behind it, Kimberly Clark will be in a position on Tuesday to issue a more concrete outlook for 2019. As it stands, that forecast calls for sales to rise 2%, which would mark an acceleration over last year's 1% uptick but still trail P&G's 4% pace. Earnings are projected to roughly double that 2% expansion rate as expense cuts and price boosts offset the impact of higher costs.

But considering the stock's rally this year, investors aren't likely to celebrate a simple affirmation of these modest goals. Instead, Wall Street is hoping Kimberly Clark can show sustained improvement in its operating trends, just as P&G has done in recent months.