Reasons Why Kimberly-Clark (KMB) Should be in Your Portfolio
Kimberly-Clark Corporation KMB is well-poised for growth, courtesy of strength across its end markets, effective pricing actions, acquired assets and a focus on operational execution. The company has been focused on investing in growth opportunities, solidifying its long-term market position and staying committed to shareholder returns.
This Zacks Rank #2 (Buy) company has a market capitalization of $46.2 billion. Over the past three months, it has gained 3% against the industry’s decline of 2.2%.
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Let’s delve into the factors that have been aiding this manufacturer of consumer products for a while now.
Business Strength: Kimberly-Clark has been benefiting from strength across its personal care and consumer tissue end markets. The company’s robust pricing actions are likely to continue working well amid cost inflation.
In the first quarter of 2023, the company generated net sales of $5,195 million, reflecting an increase of 2% year over year. Organic net sales increased by 5%, with a 10% rise in price and a favorable product mix stemming from the ongoing revenue growth management programs. Organic sales grew in both North America and developed markets, including Australia, South Korea and Europe.
For 2023, the company anticipates net sales growth in the range of flat to 2%, while organic sales are projected to increase by 2-4%.
Growth Initiatives: The company remains focused on its three key strategic growth pillars, which include efforts to boost its core business in developed markets, accelerate the growth of the Personal Care segment in developing and emerging markets and improve digital and e-commerce capacities.
The company has been progressing well with these objectives through product development across different categories and leveraging capabilities in marketing and sales. Also, the company’s FORCE Program has been helping it reduce operating costs and enhance supply-chain productivity for a while.
Acquisition Benefits: Kimberly-Clark believes in strengthening its businesses through adding assets. In February 2022, it acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category. In October 2020, KMB closed the buyout of Softex Indonesia — a leading player in the Indonesian personal care market. Notably, acquisitions contributed 1% to the Personal Care segment’s revenue growth in the first quarter.
Also, in October 2022, KMB entered into a deal to divest its Neve tissue brand in Brazil and related consumer and KCP tissue assets to Suzano. The move will allow the company to better focus on and efficiently direct resources to its Personal Care and Consumer Tissue businesses in Brazil.
Shareholder-Friendly Policy: The company remains committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the first quarter, it paid out dividends of $391 million and repurchased shares worth $34 million. Management projected share buybacks in the band of $100-$150 million for 2023.
3 Other Key Picks
Some other top-ranked stocks are Ingredion Incorporated INGR, Edgewell Personal Care Company EPC and Krispy Kreme, Inc. DNUT. INGR sports a Zacks Rank #1 (Strong Buy), and EPC and DNUT carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingredion is a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions. The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise by 22.1% from the corresponding year-ago reported figure.
Edgewell Personal Care specializes in producing personal care products. The Zacks Consensus Estimate for EPC’s current financial-year sales suggests 3.9% growth, while earnings per share are expected to decline by 4.7% from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 33.3%, on average.
Krispy Kreme operates as a leading producer of doughnuts throughout the world. The Zacks Consensus Estimate for DNUT’s current financial-year sales and earnings per share suggests growth of 9.9% and 13.8%, respectively, from the corresponding year-ago reported figures. The company’s earnings surprise in the last reported quarter was 12.5%.
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Kimberly-Clark Corporation (KMB) : Free Stock Analysis Report
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