Kimberly-Clark Stock Dips and a Buying Opportunity Emerges

Key Points

• Kimberly-Clark is a global consumer products manufacturer specializing in personal care and tissue products with brands like Huggies, Depend, Kleenex, and Scott.
• The company beat Q2 2024 EPS estimates by 25 cents, but revenues fell 2% YoY, which caused shares to fall 5.7%, but shares rallied on the raised 2024 guidance.
• KMB shares are trading up 16.7% in 2024 and may look to retest its high of $145.62.

Global personal care products giant Kimberly-Clark Co. NYSE: KMB stock formed a resilient and rapid rebound after initially falling on its Q2 2024 earnings results. The company’s portfolio of brands are household names in 175 countries, as nearly 25% of the world's consumer population uses its product daily. Shares peaked after $160.19 in August 2020 during the pandemic and sank to a low of $108.72 before staging a rebound to a 52-week high of $145.62. Investors can watch for the daily symmetrical triangle pattern to resolve.  

Kimberly-Clark operates in the consumer staples sector, competing with consumer goods manufacturers like Proctor & Gamble Co. NYSE: PG, Colgate-Palmolive Co. NYSE: CL and Clorox Co. NYSE: CLX.

Kimberly-Clark has a Popular Portfolio of Brands

While the name Kimberly-Clark may not be familiar to consumers, its brands are well known. Huggies, Poise, Kotex, and Depends lead the company's Personal Care brands. This segment saw the most promising growth in Q2 2024, with 8% YoY organic growth and 14% YoY operating profit growth. China and North America led volume growth. Focus markets experiencing volume growth include Australia, Brazil, and Indonesia.

Its Consumer Tissue brands are led by Scott, Kleenex, Cottonelle, Viva, and Andrex. Organic growth fell by 2%, but operating profit grew by 23% YoY in Q2 2024. Flat volumes reflected mid-single digit pricing in North America offset by retailer inventory reductions in North America. Low single-digit pricing in North America was more than offset by the lapping of energy surcharges in Western Europe. Volume-led share gains with Kleenex in the U.S., U.K., Australia, and Andrex in the U.K.

Its K-C Professional brands include Scott, Kleenex, and WypAll, which experienced flat organic growth and a 1% drop YoY in operating profit. Lower volumes in North America were driven by ongoing business rightsizing and recent foot traffic weakness in Retail, Foodservice and Lodging channels.

KMB Forms a Symmetrical Triangle Pattern

The daily candlestick chart for KMB illustrates a symmetrical triangle pattern. This pattern is comprised of a descending upper trendline and a rising lower ascending trendline converging at the apex point. KMB shares initially sank 5.7% to $138.74 on its Q2 2024 earnings release, falling to a low of $134.67 before rallying back to a $142.79 gap fill in the following days. The daily relative strength index (RSI) has flattened around the 54-band. Pullback support levels are at $

Kimberly-Clark Has Mixed Q2 2024 Results

The company reported Q2 2024 EPS of $1.96, handily beating consensus analyst estimates by 25 cents. However, revenues fell 2% YoY to $5.03 billion, falling short of consensus estimates of $5.1 billion. FX translation impacted sales by 5%. The divestment of its Tissue and K-C Professional business in Brazil in June also impacted sales by 1%. Organic sales rose 4%, driven by a 2% increase in price and a 2% increase in volume and mix. Volume and mix were positives across North America, developing and emerging (D&E) markets, and developed markets like Australia, South Korea, and Western and Central Europe.

Net interest expense was $63 million, down from $67 million in the year-ago period. The year-to-date (YTD) operating profit was $1.5 billion, which included $235 million in costs related to the transformation initiative. YTD adjusted operating profit was $1.7 billion, up 15% from $1.5 billion in 2023. YTD cash provided by operations was $1.5 billion, up from $1.4 billion a year ago. Fundamentals continue to shape up as the company took the opportunity to raise its 2024 outlook.

Full Year 2024 Raised Guidance Outlook

Kimberly-Clark expects organic net sales to grow at a mid-single-digit rate, while reported net sales are expected to be impacted negatively by 400 bps of currency translation and 120 bps from divestitures. Adjusted operating profit guidance was raised and is now expected to grow at a mid-to-high teens percentage rate on a constant currency (CC) basis, up from previous forecasts of low-teens growth. Reported operating profit and reported EPS are still going to be negatively impacted by 700 bps in FX translation.

Kimberly-Clark CEO Mike Hsu commented, “We have made strong progress while navigating dynamic consumer and retail environments. We have a strong foundation that we can leverage to accelerate investments across the enterprise. Our focus is to deliver high-quality consumer solutions at every price point, increase our operational scale, and enhance our long-term potential. We're excited about our opportunities to capitalize on our momentum to deliver our enduring goal of enhancing value for all our stakeholders."

Kimberly-Clark analyst ratings and price targets are at MarketBeat. There are 15 analyst ratings on KMB stock, comprised of six Buys, seven Holds, and two Sells, with a 2.72% upside to the consensus price target of $145.67.