|Bid||66.51 x 1100|
|Ask||69.59 x 2200|
|Day's range||67.90 - 68.59|
|52-week range||61.28 - 77.91|
|PE ratio (TTM)||27.19|
|Earnings date||26 Oct 2018|
|Forward dividend & yield||1.68 (2.46%)|
|1y target est||69.11|
Shares of Kimberly Clark (KMB) have recovered a bit recently, as you can see in the graph below. The company’s decision to raise net pricing in the North American consumer product business is an encouraging move, likely to help the company offset the negatives stemming from continued inflation in raw material prices. Moreover, most of the company’s peers—including Procter & Gamble (PG), Colgate-Palmolive (CL), and Clorox (CLX)—are also raising prices to offset the impact of input cost headwinds.
Colgate-Palmolive (CL), which has disappointed so far this year with its soft sales and tepid margins, further disheartened investors by reducing its sales and earnings outlook for 2018. Management now expects its top line to see low-single-digit growth, down from its earlier guidance of mid-single digit growth. Colgate-Palmolive’s top line is likely to benefit from the company’s recent acquisition in North America.
Church & Dwight (CHD) is trading at a significant premium to its peer group average, reflecting the company’s outperformance on both the sales and earnings fronts over the past several quarters. However, given the recent uptrend in the stock and projected deceleration in the sales and earnings growth rate in fiscal 2019, the shares look fully priced. Church & Dwight stock trades at 26.1x and 24.3x its projected EPS of $2.28 and $2.45 in fiscal 2018 and fiscal 2019, respectively. The company’s high valuation could restrict the upside.
Consumer packaged goods (or CPG) manufacturers haven’t had much to celebrate so far this year. Lower pricing amid intense competition in the value segment, a tough retail environment, and significant cost headwinds weighed on these companies’ financials and, in turn, their stock prices. Plus, macroeconomic challenges across several markets remained a drag.
Procter & Gamble (PG) stock has taken a beating in 2018. The weak top-line performance due to heightened competitive activity, pressure on the margins from the inflation in commodities, and higher shipping costs are taking a toll on Procter & Gamble’s financials. On a YTD basis, Kimberly-Clark, Clorox, and Colgate-Palmolive shares have declined 5.8%, 1.8%, and 13.5%, respectively.
Procter & Gamble (PG) has a rich history of beating analysts’ EPS expectations. The company has surpassed analysts’ estimates in the past 13 quarters with an average surprise of 4.4%. The company’s commendable performance on the earnings front comes amid significant pressure on its sales and margins, which is commendable.
Procter & Gamble (PG) has struggled on the margins front in the past several quarters. The following graph shows that the company’s core gross margin rate fell at an increased rate in the past four quarters, which isn’t a good sign. During the last reported quarter, Procter & Gamble’s core gross margin fell by ~140 basis points to 47.9%.
Analysts expect Procter & Gamble (PG) to continue to disappoint investors with its sales performance in the first half of fiscal 2019. Analysts’ consensus estimate indicates a low single-digit decline in Procter & Gamble’s top line for the first two quarters of fiscal 2019. Analysts expect Procter & Gamble to report net sales of $16.6 billion and $17.3 billion in the first and second fiscal quarter, respectively.
Becton Dickinson (BDX) generated revenues of $4.3 billion in the fiscal third quarter compared to $1.5 billion in the fiscal third quarter of 2017, reflecting a ~41% YoY (year-over-year) growth. The acquisition of C.R. Bard primarily contributed to Becton Dickinson’s revenue growth in the third quarter.
As of August 15, shares of Kimberly-Clark (KMB) have risen 10.5% since its second-quarter results on July 24. The primary reason for the recovery in the stock price is the anticipated increase in net selling prices. Kimberly-Clark’s management stated during the second-quarter conference call that it plans to increase pricing to offset the pressure on margins from continued inflation in commodity prices, including pulp.
A majority of analysts providing recommendations for Church & Dwight (CHD) stock have a “neutral” outlook, despite the company’s stellar financial performance in the first half of the year and its upbeat sales and earnings outlook. Church & Dwight stock was trading at a forward PE multiple of 23.8x, which is higher than most of its peers. Church & Dwight stock is also trading at a premium to the S&P 500 Index (SPY).
Church & Dwight’s (CHD) bottom line is growing at a rapid rate. In the first quarter of 2018, its adjusted earnings marked a 21.2% increase. Its second-quarter EPS grew 19.5%. Its strong sales and a significant decline in the tax rate have been driving its earnings higher.
Church & Dwight (CHD) registered impressive sales growth in the past several quarters. The company’s top line has grown at a double-digit rate in the past four quarters, reflecting strong organic volumes and benefits from acquisitions. However, similar to its peers, pricing remained low and adversely impacted the top-line growth rate.
Most of the analysts continue to have a neutral outlook on the stocks of packaged goods manufacturers including Kimberly-Clark (KMB), Procter & Gamble (PG), Clorox (CLX), and Colgate-Palmolive (CL).
Clorox is one of only a few CPG companies that have managed to improve volumes as well as pricing. Other major CPG stocks like Procter & Gamble (PG), Kimberly-Clark (KMB), and Colgate-Palmolive (CL) have failed to improve pricing due to the heightened competitive environment. During the fiscal fourth quarter 2018 conference call, Clorox’s management stated that the company is increasing pricing in about 50% of its portfolio, which is expected to offset the negative impact from higher commodity costs.
Will These H1 2018 Stragglers Bounce Back in H2? Colgate-Palmolive’s (CL) first-half performance has been disheartening. Peers are no better, which is why Kimberly-Clark (KMB), Clorox (CLX), and Procter & Gamble (PG) are also trading in the red.
Lower net selling prices, lower birth rates in South Korea, and macroeconomic challenges in Latin America subdued volumes and pricing. Also, weakness in the United States and competitive challenges in China further pressured the sales growth rate. The company’s second-half sales performance isn’t likely to be different as persisting headwinds could continue to hurt the top-line growth rate.
Procter & Gamble (PG) managed to improve its net and organic sales growth rate in fiscal 2018 thanks to the favorable currency rates and higher volumes. Price investments to defend its market share in the grooming category and increased competition in the value segment restricted organic sales growth, which grew by only 1.0% in fiscal 2018. In the near term, pricing is expected to remain low and could adversely impact the organic sales growth rate.
NEW YORK, Aug. 09, 2018-- In new independent research reports released early this morning, Fundamental Markets released its latest key findings for all current investors, traders, and shareholders of ING ...
Several analysts raised their target price on Clorox (CLX) stock following the company’s fourth fiscal quarter results. Wells Fargo increased its target price to $135 per share from $123. Meanwhile, Jefferies increased its target price on Clorox to $138 per share from $124. RBC raised its target price to $134 from $130.