Kimberly-Clark Posts Strong Results; Hikes Dividend
Kimberly-Clark Corp. (NYSE: KMB – $121.21) reported fourth-quarter net income of $505 million, and adjusted earnings of $1.45 per share, up from $333 million, or $1.42 per share, as adjusted, for the same period last year. Earnings beat analysts’ estimates of $1.42 and the shares are higher by 3.5% in today’s trading. Sales for the quarter totaled $4.54 billion, unchanged from last year and below the $4.55 billion consensus. The maker of Kleenex tissues and Huggies diapers has offset slower sales with a cost-cutting plan, completed last year, that is expected to save $140 million annually. Investment is needed as well to address changing consumer tastes and to capitalize on areas of growth, such as in China. Kimberly has also been trying to capture additional market share. Beyond increasing the efficiency of its operations, the company has been investing in its product pipeline. Product innovation and targeted growth initiatives may well remain a key priority going forward. The company also said it has raised the quarterly dividend by 5.4% to $0.97 per share, which yields 3.2% at current levels.
Sales in 2017 are expected to be similar to 2016, which were $18.2 billion, below consensus is $18.5 billion. And the company sees 2017 EPS of $6.20 to $6.35 vs. a mean of $6.28 expected by analysts. Shares of Kimberly-Clark offer about-average appreciation potential over the next 3 to 5 years. However, the equity’s attractive dividend yield, and well-covered and growing dividend program help sweeten total return prospects. What’s more, KMB holds healthy conservative appeal for the risk-averse.