Kimberly-Clark Earnings: Ongoing Brand Investment Fuels Volumes, While Efficiency Gains Boost Profit

Narrow-moat Kimberly-Clark's commitment to investing in consumer-valued innovation and stringently unlocking productivity savings ($120 million in the quarter) yielded a 6% increase in organic sales (on a 4% benefit from higher prices, primarily in inflationary economies) and a 390-basis-point boost in gross margin to 37.1% in its first fiscal quarter. With fiscal 2024 off to a strong start, management beefed up its adjusted EPS growth outlook to a low-teens from a high-single-digit percentage; we plan to bump up our high-single-digit EPS growth forecast to within the revised range. When combined with a time value of money benefit, our $139 fair value estimate should increase by a low-single-digit percentage, leaving shares fairly valued after a mid-single-digit pop on the news.