Shares of Kimberly-Clark Corp. (KMB) reached a 52-week high of $116.78 on Nov 28, 2014 driven by the recent announcement of a new share buyback program. In fact, shares of this consumer products giant have been rising since the company reported strong third quarter 2014 results on Oct 21. The closing price of this stock on Friday was $116.59, translating to a year-to-date return of 19.8%.
Share Repurchase Program
On Nov 13, the board of Kimberly-Clark authorized a new share repurchase program for up to 40 million shares for $5 billion. The authorization has expanded the company’s current 50 million share authorization, which is expected to be completed in the first quarter of 2015. (Read: Kimberly-Clark Boosts Shareholder Value Yet Again)
In addition, Kimberly-Clark declared a regular quarterly dividend of 84 cents per share, which will be paid on Jan 5, 2015, to shareholders as of Dec 5, 2014.
By the end of the year 2014, Kimberly-Clark expects to repurchase shares worth $1.3 billion to $1.5 billion. Regarding dividends, the company targets a dividend hike of 2% to 4% in 2014 that will allow it to maintain an appropriate payout ratio.
Share buybacks have also contributed to earnings growth in the recently reported third quarter 2014 results. In fact, strong third quarter results have also helped the company to gain share price momentum.
Kimberly-Clark’s third quarter 2014 earnings of $1.61 per share exceeded the Zacks Consensus Estimate of $1.54 by 4.5% and grew 11.8% from the year-ago figure of $1.44 per share. Earnings were boosted by organic sales growth, cost savings and lower share count owing to share buybacks, which made up for increased input costs, currency headwinds, higher tax rate and lower net income from equity companies. (Read: Kimberly-Clark's Q3 Earnings & Revenues Beat Estimates)
Currently, Kimberly-Clark has a Zacks Rank #3 (Hold).
Some better-ranked players in the consumer staple sector include Aramark Holdings (ARMK), McCormick & Co, Inc. (MKC) and Hain Celestial Group, Inc. (HAIN). While Aramark Holdings sports a Zacks Rank #1 (Strong Buy), McCormick and Hain Celestial carry a Zacks Rank #2 (Buy).
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