Shares of Kimberly-Clark Corporation (KMB) rallied 8.1% on Friday after the company posted better-than-expected results for the first quarter of 2022. KMB manufactures sanitary paper products and surgical & medical instruments.
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Net sales of $5.1 billion came in above the Street’s estimate of $4.89 billion. Also, it increased 7% year-over-year on the back of higher revenues in the Personal Care, Consumer Tissue and K-C Professional segments. Organic sales were also up 10% as net selling prices increased 6%, and volume and product mix benefitted sales by 2%,.
Kimberly-Clark delivered an adjusted EPS of $1.35, down 25% from $1.80 in the same quarter last year. However, it surpassed analysts’ expectations of $1.23 per share. Operating profit declined to $693 million from $770 million last year.
The Chairman and CEO of Kimberly-Clark, Mike Hsu, said, “Our growth strategy is working and we’re continuing to invest in our business. Additionally, we continue to take the necessary actions to mitigate macro headwinds and remain committed to improving our margins over time.”
Outlook
The company has updated its guidance for 2022. Kimberly-Clark projects net sales growth of between 2% and 4%, compared with the prior guidance of 1% to 2%. Organic sales are expected to rise 4% to 6% on the back of higher net selling prices.
Further, adjusted operating profit is likely to fall low to mid-single digits percent, compared to adjusted operating profit in 2021. The outlook has been adjusted for the net benefit from the acquisition of controlling interest in Thinx.
The company reaffirmed its guidance for earnings per share between $5.60 and $6 per share. It excludes the impact of net benefit from the acquisition of controlling interest in Thinx recognized in the first quarter.
Wall Street’s Take
Recently, J.P. Morgan analyst Andrea Faria Teixeira maintained a Sell rating on Kimberly Clark with a price target of $120, implying 13.4% downside potential from current levels.
Based on one Buy, eight Holds and four Sells, the stock has a Hold consensus rating. Kimberly-Clark’s stock price target of $127.75 implies 7.8% downside potential from current levels. Shares have gained 9.8% over the past year.
Investors’ Sentiment
TipRanks’ Stock Investors tool shows that retail investors currently have a Very Positive stance on Kimberly Clark, with 22.4% of investors increasing their exposure to KMB stock over the past 30 days.
Takeaway
Upward outlook revisions, decent quarterly performance and constant efforts to grow should keep KMB stock in investors’ good books. Further, positive sentiments of hedge funds and insiders make the stock an attractive pick.
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