Kimberly-Clark Earnings Cheat Sheet: Margins Shrink For Fifth Straight Quarter as Profit Falls

S&P 500 (NYSE:SPY) component Kimberly-Clark Corporation (NYSE:KMB) reported its results for the third quarter. Kimberly-Clark manufactures and markets a range of mostly paper-based consumer products.

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Kimberly-Clark Earnings Cheat Sheet for the Third Quarter

Results: Net income for Kimberly-Clark Corporation fell to $432 million ($1.09 per share) vs. $469 million ($1.14 per share) a year earlier. This is a decline of 7.9% from the year earlier quarter.

Revenue: Rose 8.1% to $5.38 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: KMB reported adjusted net income of $1.26 per share. By that measure, the company fell in line with the mean estimate of $1.26 per share. Analysts were expecting revenue of $5.31 billion.

Quoting Management: Chairman and Chief Executive Officer Thomas J. Falk said, “While we are not on track with all of our goals this year, I’m encouraged that execution of our Global Business Plan strategies enabled us to deliver four percent growth in organic sales and double-digit growth in adjusted earnings per share in the third quarter. Our focus on targeted growth initiatives, revenue realization and cost reduction allowed us to overcome significant input cost inflation and softer-than-expected demand in portions of the developed markets. Our market positions remain solid overall and our innovation and marketing programs are on track. We also continue to generate strong cash flow.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.9 percentage points to 29.5% from the year earlier quarter. Over that time, margins have contracted on average 3.2 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 8.3% to $5.26 billion in the second quarter. The figure rose 4% in the first quarter from the year earlier and climbed 1.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of $1.18 versus a mean estimate of net income of $1.15 per share.

Net income has dropped 10.8% year over year on average across the last five quarters. Performance was hurt by a 19.4% decline in the third quarter of the last fiscal year from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.32 a share to $1.30 over the last thirty days. For the fiscal year, the average estimate has moved down from $4.84 a share to $4.83 over the last sixty days.

Competitors to Watch: The Procter & Gamble Co. (NYSE:PG), Cardinal Health, Inc. (NYSE:CAH), Church & Dwight (NYSE:CHD), Colgate-Palmolive (NYSE:CL), Clorox (NYSE:CLX), Johnson & Johnson (NYSE:JNJ), Zep (NYSE:ZEP) and Avon Products (NYSE:AVP).

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

(Source: Xignite Financials)