Kimberly Clark (NYSE:KMB), the global powerhouse behind brands such as Kleenex, Scott, Huggies, Pull-Ups, and Depend, is scheduled to release its first-quarter earnings in just a few days. Let's take a look at the company's most recent report and the expectations for the upcoming release to determine whether we should buy in right now or if we should wait to see what the company has to say.

Source: Kimberly Clark

The last time out
On Jan. 24, Kimberly Clark released a fourth-quarter report that capped off an excellent year; here's a breakdown and a year-over-year comparison of the results:

Earnings Per Share $1.44 $1.39
Revenue $5.305 billion $5.280 billion

Source: Benzinga

Kimberly Clark's earnings per share increased 5.1% and revenue was relatively flat year-over-year, as organic sales rose 5%. Here's a summary of the company's revenue growth by segment:

Segment4Q 20134Q 2012% Change
Personal Care $2,366 million $2,380 million (0.6%)
Consumer Tissue $1,668 million $1,675 million (0.4%)
K-C Professional $846 million $825 million 2.5%
Health Care $417 million $410 million 1.7%
Corporate & Other $8 million $17 million (52.9%)
Total $5,305 million $5,307 million (0.04%)

Source: Earnings Report


As you can see, K-C Professional showed the highest growth, driven by a 6% increase in international sales. Healthcare came in a close second, led by increased sales of pain-management products. Europe dragged down sales in the personal care and consumer tissue segments, with these segments' sales falling 45% and 8%, respectively, but these declines stemmed from strategic changes being made by the company.

During the quarter, Kimberly Clark repurchased 1.2 million shares for approximately $250 million, which shows that it is still highly dedicated to returning value to shareholders. Also, the company noted that it planned to raise its dividend by 2%-4% in the coming weeks, and this came true on Feb. 25 when it announced a 3.7% increase. Overall, Kimberly Clark had a great quarter and the stock responded to this by jumping 1.88% higher in the trading session, and it has continued higher in the months since then.

Expectations & what to watch for
Kimberly Clark's first-quarter results for fiscal 2014 are due out before the market opens on April 21; here's what analysts currently expect to see:

MetricExpectedYear Ago
Earnings Per Share $1.48 $1.48
Revenue $5.32 billion $5.32 billion

Source: Estimize


These expectations call for the company's earnings per share and revenue to remain flat year-over-year, which I think is conservative given the overall strength of Kimberly Clark's brands and the company's constant repurchase activity; however, there are three other key metrics to watch:

  1. First off, I would like to see the updated expectations on cost savings from the company's FORCE program, which the company currently estimates at $300 million; these savings and the $30 million in expected savings from the pulp and tissue restructuring completed by the company in December of 2012 will positively impact its operating profit in 2014 and afterward.
  2. Secondly, it will be important for Kimberly Clark to reaffirm its full-year earnings per share guidance of $6.00-$6.20 which it provided in the fourth-quarter report; this would represent growth of 4%-7.5% from fiscal 2013, which is much lower than the 9.9% we saw from 2012 to 2013. An increase in the outlook would be the best-case scenario, but we will settle with a reiteration.
  3. Lastly, it will be absolutely crucial for Kimberly Clark to reaffirm its intention of repurchasing $1.3 billion-$1.5 billion worth of its shares during fiscal 2014. Share repurchases are one of the primary catalysts of earnings-per-share growth for companies like this, so the more repurchases the better.
If Kimberly Clark can meet or exceed earnings expectations and satisfy these three elements, and I believe it will, there is no doubt in my mind that the stock will head higher and set a new 52-week high. 

Competitor's results due out days later

Source: P&G

Procter & Gamble (NYSE:PG), or P&G, is one of Kimberly Clark's largest competitors in the industry and it is scheduled to release its quarterly results two days later on April 23. The report is due out before the market opens and analysts currently expect the following results: 

MetricExpectedYear Ago
Earnings Per Share $1.02 $0.99
Revenue $20.68 billion $20.60 billion

Source: Estimize

These estimates call for Procter & Gamble's earnings per share to increase 3% and revenue to increase by 0.4%, which is very close to the flat growth expected for Kimberly Clark; however, it is worth noting that P&G is still in the midst of restructuring its international operations, so any growth accomplished during this process is impressive. With this said, I still prefer Kimberly Clark over P&G at this point due to the success of its cost-cutting programs, but P&G is still one of the most powerful companies in the world and it will likely get back on the path of growth following the completion of its restructuring. 

The Foolish bottom line
Kimberly Clark is a great American company and it has watched its stock more than double since the market lows in March of 2009. I believe the company is stronger than ever as of today and its first-quarter report will support a continued rally in its share price. Foolish investors should strongly consider initiating positions going into the report and holding on to them for the long-term as Kimberly Clark could outperform the overall market for many years and provide additional returns via its healthy 3.1% dividend and share repurchases.