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Kimberly-Clark Delivers Mixed Q3 Results; Cuts FY21 EPS Guidance

Kimberly-Clark Corporation (KMB) delivered mixed Q3 2021 results characterized by a significant increase in revenue and a decline in adjusted earnings. The results underscore a dynamic and challenging macro-environment. Consequently, the company has updated its FY2021 outlook, cutting its adjusted EPS view. KMB shares fell 2.2% to close at $130.11 on October 25.

Kimberly-Clark manufactures and sells Personal Care, Consumer Tissue, and K-C Professional (KCP) products. Its brands include Depend, Huggies, Kleenex, Kotex, and Scott.

Net sales in Q3 increased 7% year-over-year to $5 billion, attributed to the positive impact of foreign exchange rates and the impact of the Softex Indonesia acquisition. Organic sales were up 4%, as net selling prices increased 3% and product mix increased sales by 1%.

Kimberly-Clark delivered adjusted EPS of $1.62, a decline from $1.72 in the same quarter last year. Operating profit declined to $657 million from $666 million last year. (See Top Smart Score Stocks on TipRanks)

According to CEO Mike Hsu, earnings were negatively impacted by runaway inflation and supply chain disruptions, which caused a significant increase in costs. Kimberly-Clark has since taken the necessary steps to mitigate the headwinds with additional pricing and enhanced cost management.

For the full year, Kimberly-Clark is projecting net sales growth of between 1% to 2%, compared to previous guidance of between 1% and 4%. Organic sales are expected to decline by 1% to 2% versus previous guidance for a decline of up to 2%.

Full-year adjusted EPS is expected to range between $6.05 and $6.25, compared to previous guidance of between $6.65 and $6.90. Kimberly-Clark is also targeting share repurchases of about $400 million versus previous guidance of between $400 and $450 million.

Recently, Barclays analyst Lauren Lieberman reiterated a Buy rating on the stock with a $137 price target, implying 5.30% upside potential to current levels.

Consensus among analysts is a Hold based on 1 Buy, 3 Holds, and 1 Sell. The average Kimberly-Clark price target of $126.60 implies a 2.7% downside potential to current levels.

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