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Kimberly-Clark Tops 4Q Estimates, Hikes Dividend By 6.5%

Kimberly-Clark Corp. announced stronger-than-expected fourth-quarter results amid robust demand for its personal care and tissue products during the coronavirus pandemic. Shares of the consumer product company closed 3.3% higher on Monday following the release

Additionally, Kimberly-Clark’s (KMB) raised its quarterly dividend and introduced a new share repurchase plan.

The company’s 4Q earnings of $1.69 per share declined 1.2% year-over-year due to lower operating profits but still beat analysts’ expectations of $1.62 per share. Meanwhile, the company’s 4Q sales of $4.84 billion topped the consensus estimates of $4.73 billion and grew 6% year-over-year.

Kimberly-Clark said that quarterly revenues were driven by higher volumes and pricing across the personal care and consumer tissue segment. Furthermore, the Softex Indonesia acquisition increased its top line by 2%. However, adverse foreign currency exchange rates dented sales growth by 1%. Organic sales grew 5% in the quarter.

The company raised its dividend by 6.5%, marking the 49th consecutive hike in annual dividends. The new dividend of $1.14 per share will be paid on Apr. 5 to shareholders of record as of Mar. 5. This translates into an annual dividend of $4.56 per share, which implies a dividend yield of about 3.34%.

The board also authorized a new $5 billion share repurchase program. The company’s existing $5 billion share repurchase authorization is expected to be completed by the end of 2021. 

As for 2021, Kimberly-Clark foresees adjusted EPS in the range of $7.75-$8. Analysts’ 2021 EPS estimate stands at $7.77. The company forecasted 2021 revenue growth in the range of 4%-6%, which is higher than analysts’ growth expectations of 2.4%. Further, the company expects its organic sales to increase by 1%-2%. (See KMB stock analysis on TipRanks)

Ahead of the earnings results on Jan. 21, Deutsche Bank analyst Stephen Powers lowered the stock’s price target to $144 (5.5% upside potential) from $150 and maintained a Hold rating. The analyst had expected lower profits than the consensus as Kimberly-Clark is focusing on “its reinvestment priorities” for 2021.

From the rest of the Street, the stock scores a Hold analyst consensus based on 3 Holds, 1 Sell, and 2 Buys. The average analyst price target of $146.50 implies upside potential of about 7.3% to current levels. Shares have declined by about 2% over the past year.

Meanwhile, KMB scores a perfect 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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