Shares of Kimberly-Clark (KMB 1.64%), which makes paper goods, diapers, and personal care products, among other things, rose dramatically at the open on April 22, gaining as much as 10.5% in the first hour of trading. The big news was the company's pre-market earnings release, which investors clearly liked.
On the top line, Kimberly-Clark reported first-quarter 2022 sales of $5.1 billion, which was up roughly 7% from the same quarter in 2021. Analysts had been looking for something closer to $4.9 billion. The big number on the sales front, however, was the company's huge 10% organic sales advance, which was driven by sales mix (2 percentage points), volume growth (2 percentage points), and price increases (6 percentage points). These three numbers are notable because they mean that customers were buying higher-margin products (mix), buying more overall (volume), and willing to absorb fairly material product price increases (price). That's a very strong showing in the face of inflation.
The good news doesn't stop there. Although adjusted earnings per share fell 25% from the first quarter last year, the $1.35 per share Kimberly-Clark earned was notably better than the $1.24 analysts were looking for. Which means that the consumer staples giant beat on both the top and bottom lines, which investors often find particularly exciting. So it isn't shocking that Wall Street was in a buying mood here.
That said, a 10.5% gain is pretty big for a company like Kimberly-Clark, which is known for being slow and boring. Which brings up management's updated guidance for 2022. Going into the year, the company was projecting organic sales growth of 3% to 4%, but it is now calling for this key industry figure to land between 4% and 6%, a material uptick. And while the company didn't alter its adjusted earnings expectations for 2022, the organic sales change hints that it is taking a difficult market environment pretty much in stride. That's something that investors are probably right to cheer about.