Shares of Kimberly-Clark Corp. KMB reached a 52-week high of $126.59 on Dec 23, 2015 fueled by strong business momentum. In fact, shares of this consumer products giant have been rising since the company reported strong third quarter 2015 results on Oct 21. The closing price of this stock on Tuesday was $126.37.
Factors at Play
Kimberly-Clark’s cost saving initiatives and continued product innovation have been driving earnings for the past many quarters. Regular innovation helps in improving brand positions and market share in the consumer categories. The company continues to innovate and upgrade products and remains on track to re-launch its new Snug N' Dry mainline diapers. In adult care, the company has launched Poise Impressa, which is a unique innovation that helps prevent light bladder leakage. The company expects it to be well received by consumers.
The company also achieved higher organic sales on the back of volume growth and better pricing in last six consecutive quarters. Moreover, the spin-off of the health care business is allowing Kimberly-Clark to focus on its core portfolio.
It has initiated a restructuring program in order to improve organizational efficiency and underlying profitability. The restructuring is expected to be completed by the end of 2016, with expectations of cumulative pre-tax savings in the range of $120 million to $140 million by the end of 2017. In 2015, the restructuring initiative is expected to generate cost savings in the range of $60 million to $80 million.
Though Kimberly-Clark continues to expect currency volatility and increased competition in its diapers segment over the near term, it has raised the guidance range for full-year earnings and organic sales growth.
Kimberly-Clark has a Zacks Rank #3 (Hold).
Better-ranked stocks in the consumer staples sector include Ollie's Bargain Outlet Holdings, Inc. OLLI, Blue Buffalo Pet Products, Inc. BUFF and Post Holdings, Inc. POST. All of them hold a Zacks Rank #2 (Buy).
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