What Happened?
Shares of household products company Kimberly-Clark (NYSE: KMB) fell 2.6% in the afternoon session after the company detailed the financial impact of its strategic transformation at an investor conference, highlighting significant costs tied to recent divestitures.
During a presentation at the Piper Sandler Growth Frontiers Conference, CEO Mike Hsu and CFO Nelson Urdaneta discussed the company's ambitious reshaping plans. However, the focus for investors appeared to be on the financial headwinds associated with its recent transactions. The company expects to incur $150 million in stranded costs due to its recent divestitures. This is anticipated to have a negative impact on earnings per share (EPS) in the range of $0.30 to $0.40. While Kimberly-Clark is targeting long-term goals of a 40% gross margin and 18% EBITDA by 2030, the immediate earnings pressure seems to be weighing on investor sentiment.
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What Is The Market Telling Us
Kimberly-Clark’s shares are not very volatile and have only had 1 move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock gained 4.8% on the news that the company reported mixed second-quarter results that featured the strongest sales volume growth in five years and an earnings-per-share figure that surpassed analyst expectations. Investors looked past a headline revenue figure that missed expectations, which the company attributed to recent business divestitures. Instead, market participants focused on a 3.9% rise in organic sales, a key metric that shows the health of the core business. This growth was fueled by the strongest increase in sales volume in five years, suggesting robust consumer demand. Furthermore, the company's adjusted earnings per share of $1.92 comfortably surpassed analyst forecasts. The strong underlying performance and profit beat signaled that the company's strategic plans found success.
Kimberly-Clark is down 2% since the beginning of the year, and at $128.08 per share, it is trading 13.1% below its 52-week high of $147.40 from March 2025. Investors who bought $1,000 worth of Kimberly-Clark’s shares 5 years ago would now be looking at an investment worth $864.53.
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