Is KimberlyClark Corporation (KMB) Trending Stock a buy it now?

Kimberly Clark (KMB) is one of the most viewed stocks by Zacks.com visitors lately. So it might be worth looking at some of the factors that could affect the stock’s short-term performance.

Over the past month, shares of this maker of consumer products such as Huggies diapers and Kleenex facial tissue have returned -1.2%, compared to the +6.3% change in the Zacks S&P 500 composite. during this period, the Zacks Consumer Products – Staples industry, of which Kimberly-Clark is a part, gained 9.1%. The key question now is: what could be the future direction of the title?

Although media reports or rumors of a material change in a company’s business outlook usually cause its stock to trend and result in an immediate price change, there are always certain fundamental factors that ultimately determine the buy and hold decision.

Revisions to earnings estimates

At Zacks, we prioritize evaluating change in a company’s future earnings projection over anything else. This is because we believe that the present value of its future income stream is what determines the fair value of its stock.

We basically look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest trading trends. And if earnings estimates increase for a company, the fair value of its shares increases. A higher fair value than the current market price stimulates investors’ interest in buying the stock, causing its price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, Kimberly-Clark is expected to post earnings of $1.28 per share, indicating a -12.9% change from the prior year quarter. The Zacks consensus estimate has changed -0.6% over the past 30 days.

For the current year, the consensus earnings estimate of $5.80 indicates a change of -6.2% from the prior year. Over the last 30 days, this estimate has changed by -0.3%.

For the next fiscal year, the consensus earnings estimate of $6.80 indicates a change of +17.2% from what Kimberly-Clark is expected to report a year ago. Over the past month, the estimate has changed by -0.2%.

With an impressive externally audited track record, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance, as it effectively harnesses the power of earnings estimate revisions. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, resulted in a Zacks No. 4 (sell) ranking for Kimberly-Clark.

The chart below shows the evolution of the company’s consensus 12-month EPS estimate:

12 month EPS

Revenue Growth Forecasts

While a company’s earnings growth is arguably the best indicator of its financial health, nothing happens if it can’t grow its revenue. It is almost impossible for a company to increase its profits without increasing its revenue for long periods of time. Therefore, knowing the potential revenue growth of a business is crucial.

For Kimberly-Clark, the current quarter sales consensus estimate of $4.91 billion indicates a +4% year-over-year change. For the current and next fiscal year, the estimates of $20.1 billion and $20.54 billion indicate variations of +3.4% and +2.2%, respectively.

Latest reported results and history of surprises

Kimberly-Clark reported revenue of $5.1 billion last quarter, representing a year-over-year change of +7.4%. EPS of $1.35 for the same period versus $1.80 a year ago.

Compared to Zacks’ consensus estimate of $4.92 billion, reported revenue is a surprise +3.62%. Surprise EPS was +9.76%.

In the past four quarters, Kimberly-Clark has exceeded consensus EPS estimates twice. The company has exceeded consensus revenue estimates three times during this period.

Evaluation

No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.

While comparing the current values ​​of a company’s valuation multiples, such as the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash flow (P/CF) ratio , along with its own historical values ​​help determine whether its stock is fairly valued, overvalued or undervalued, comparing the company against its peers on these metrics gives a good idea of ​​the reasonableness of the stock price .

As part of the Zacks Style Scores system, the Zacks Value Style Score (which assesses both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on. ), which helps determine whether a stock is overvalued, correctly valued, or temporarily undervalued.

Kimberly-Clark is rated C on this front, indicating that it trades at par with its peers. Click here to see values ​​for some of the rating metrics that led to this rating.

Conclusion

The facts discussed here and plenty of other information on Zacks.com might help determine whether it’s worth paying attention to the market buzz about Kimberly-Clark. However, its Zacks No. 4 ranking suggests it may underperform the broader market in the near term.

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.

This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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