Kimberly-Clark Misses Estimates; Lowers Guidance
Kimberly-Clark Corp. (NYSE: KMB – $118.19) third quarter adjusted earnings came in at $1.52, missing the Street’s estimates at $1.54 and only a slight gain compared to the year earlier $1.51. Revenue also missed expectations at $4.59 billion as compared to $4.73 billion estimate and down 6% from $4.72 billion during the same period last year. The company pointed to a “challenging economic and competitive environment” in the quarter, although it believes its “market share positions remain healthy”. As a result, the maker of Kleenex, Huggies and the Scott’s brand of products updated its full-year guidance for 2016, lowering its top-end expectations for earnings to between $5.95 and $6.05 per share vs. the previous estimate of $5.95 and $6.15. Analysts were expecting $6.07. Organic sales growth was also lowered to around 2%, compared to the previously announced 3% to 5% range. Cash provided by operations in the third quarter of 2016 was $948 million, up 12% versus $849 million in the year-ago period, primarily due to improved working capital. The company expects that full-year 2016 spending will be somewhat below the previous target range of $950 to $1,050 million.
These top-quality shares may appeal to conservative, income minded investors. Shares should continue to make progress over the long-term, although they are currently trading close to their 52-week low. And the dividend, yielding 3.1%, is likely to grow commensurate with cash flow. On a risk-adjusted bases, high-quality KMB can be maintained in a well-diversified income portfolio.