After suffering a 27% decline over a two-year period that began in April 2016, the Kimberly-Clark Corporation (NYSE:KMB) regained nearly 83% of those losses. Over the trailing twelve months, it has delivered total returns of nearly 30% to investors.
This two-year share price decline has been the largest percentage drop since the Kimberly-Clark stock lost nearly 40% of its value during the financial crisis between April 2007 and March 2009. However, notwithstanding that drop, the Kimberly-Clark Corporation has delivered reliable long-term asset appreciation and has also supplemented its capital gains with rising dividend income distributions.
After hitting its lowest level in the past two decades in March 2009, KMB’s share price reversed direction, advanced upward by 225% and reached its all-time high in April 2016 right before the most recent correction. Another indicator of Kimberly-Clark’s financial strength and sound fundamentals is its current streak of 47 consecutive annual dividend hikes.
While Kimberly-Clark began distributing dividends in 1935, the company has boosted its annual payout every year since 1973. With such a long streak of annual dividend boosts, Kimberly-Clark is one of just 54 S&P 500 companies that have met all of the eligibility requirements for the Dividend Aristocrats designation. Dividend Aristocrats are S&P 500 companies that have boosted their annual dividends for at least 25 consecutive years and have a market capitalization of at least $3 billion.
Furthermore, the share price’s 50-day moving average has been above the 200-day average since September 2018. Kimberly-Clark’s share price and its 50-day moving average dipped slightly at the beginning of the fourth quarter of 2018. However, after a minor dip, the 50-day average and the share price managed to resume their upward trajectory by early December. Both moving averages have been advancing higher since mid-December and the share price has been trading above both moving averages since the first week of February 2019.
After missing Wall Street analysts’ earnings expectations for the last quarter of 2018, Kimberly-Clark came back and beat earnings estimates to begin the new year. On April 22, 2019, the company reported a small revenue decline and higher-than-expected quarterly earnings.
Total revenues for the first quarter fell 2% year-over-year to $4.6 billion. A closer look revealed that the company’s volume declined 2% and reported revenues suffered a 5% negative currency impact. However, organic sales increased 3%, which exceeded the company’s growth target of 2%. Furthermore, KMB’s product mix shifted towards higher price point items for a 1% contribution and a 4% increase in net prices.
The adjusted operating profit declined from $824 million in the first quarter of 2018 to $807 million for the most recent period. The main drivers of this profit drop were higher input costs of $135 million. Adjusted earnings per share (EPS) of $1.66 were 3% lower than they were in the same period last year. However, the current $1.66 EPS outperformed analysts’ earnings expectations of $1.54 by 7.8%.
In light of its first quarter results, Kimberly-Clark expressed confidence in its performance goals and confirmed its organic revenue growth target of 2% as well as its adjusted earnings guidance of $6.50 to $6.70 for full-year 2019. The company also reiterated its commitment to pursuing longer-term balanced and sustainable growth opportunities as part of its Strategy 2022 initiative.
Kimberly-Clark Corporation (NYSE:KMB)
Founded in 1872 and headquartered in Dallas, Texas, the Kimberly-Clark Corporation manufactures and markets personal care, consumer tissue and professional products. The company has manufacturing operations in 35 countries and sells its products in almost 180 countries. The Personal Care segment offers disposable diapers and baby wipes, as well as feminine and incontinence care products. Kimberly-Clark distributes these products under multiple brand names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex and Depend and Poise. Under the Consumer Tissue segment, the company provides facial and bathroom tissues, paper towels, napkins and related products under the Kleenex, Scott, Cottonelle, Viva and other brand names. The K-C Professional segment offers wipes, tissues, towels, apparel, soaps and sanitizers under the Kleenex, Scott, WypAll, Kimtech and Jackson Safety brands.
After coming out of a two-year decline in April 2018, KMB’s share price entered the trailing 12-month period on an uptrend. The share price passed through its 52-week low of $100.14 on June 21, 2018. With just one noticeable dip that occurred mostly during September 2018, the share price added nearly one-third of its value before reaching its new all-time high of $130.98 on May 22, 2019. At the end of the following trading session on May 23, 2019, the share price closed just marginally lower at $130.91. This closing price was 25.4% higher than it had been one year earlier and higher than its 22% gain over the past five years. Furthermore, the May 23, closing price also marked a 30.7% gain over the 52-week low from late June last year.
The share price decline of nearly 30% from mid-2016 to mid-2018 limited total returns to just 14% over the past three years. However, while long-term shareholders have enjoyed significantly higher total gains, investors who took a long position in the Kimberly-Clark stock last summer have enjoyed the best returns. Long-term investors have received total returns of nearly 43% over the past five years. However, KMB’s rapid share price growth over the past year and a 3%-plus dividend yield have rewarded recent shareholders with a total return of 29.4% over the trailing 12 months.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.