Today, Kimberly-Clark (NYSE:KMB) reported better-than-expected earnings for the first quarter ended March 31. Due to increased demand, the company's sales and earnings were better than Wall Street analysts expected. Investors need to be aware of increased shipments from consumer goods manufacturers. Consumers are eager to stock up on necessities in COVID-19. Procter & Gamble (NYSE:PG) also reported phenomenal growth in both quarterly sales and earnings per share.
Kimberly-Clark's first quarter earnings
Kimberly-Clark's revenue was $5 billion, more than analysts predicted at $4.9 billion and up about 8 percent year-over-year. Sales increased 8% year-over-year due to strong consumer demand in the tissue sector. At the same time, pricing and product structure also contributed 1% to the company's performance growth. However, negative exchange rates remain a drag.
Kimberly-Clark's organic sales growth outpaced Procter & Gamble's performance. Notably, the company's organic sales increased by 11% compared to Procter & Gamble's 6% growth. Increased demand for COVID-19 led to an increase in sales in the company's tissue consumer segment (+13%), primarily due to a 14% surge in sales due to increased demand for COVID-19. Revenue from the company's personal care business increased 6 percent due to a 7 percent increase in sales and favorable pricing and product mix. Sales in the K-C Specialty area increased by 4% due to higher volumes (+4%) and prices (+2%).
Kimberly-Clark's gross profit increased 25% year-over-year to $1.8 billion due to higher revenue. At the same time, gross margin rose sharply to 35.8%, which reflected higher pricing and a favorable product mix. Kimberly-Clark's adjusted operating profit was $997 million, up 24% year-over-year. Meanwhile, adjusted operating margins expanded approximately 250 basis points to 19.9 percent in the first quarter.
Kimberly-Clark reported adjusted earnings per share of $2.13, beating analysts' expectations of $1.98 and up 28 percent year-over-year. Strong sales and higher margins drove the company's profitability. In addition, lower adjusted effective tax rates and lower numbers of shares outstanding also contributed to the rise in EPS.
What are the prospects for the stock?
While I expect the surge in demand to normalize, demand for Kimberly-Clark's products is likely to continue to stabilize. A focus on productivity and cost-saving measures will likely drive a company's earnings and support its stock.
I believe that investors should hold Kimberly-Clark stock in their portfolios to weather the current stock market volatility.
The author of this article: Amit Singh, U.S. Stock Research Agency (public number: meigushe) aims to help Chinese investors understand the world, focusing on the coverage of U.S. technology stocks and Chinese stocks, friends who are interested in U.S. stocks quickly pay attention to us