Kimberly-Clark (NYSE: KMB), a consumer-products company that counts Procter & Gamble (NYSE: PG) and Colgate-Palmolive (NYSE: CL) as colleagues, announced Q2 results on Thursday. The performance wasn't spectacular, but management successfully defended the bottom line from the recession by instituting pricing strategies that leveraged the brand equity of the company's portfolio.
The bottom line fell, of course, but probably not as far as it would have if there weren't any pricing mechanisms in place. Earnings per share came in at 97 cents. This was six cents lower than last year's adjusted Q2 income. Revenues were challenged by dollar fluctuations, dropping well over 5%. However, here's the silver lining: organic sales increased almost 3%, even with volumes on the decline.
Kimberly-Clark believes better times are ahead. Management saw fit to up the company's outlook. Earnings per share are expected to fall somewhere between $4.10 and $4.25 for the full fiscal year versus previous guidance of generating between $4.00 and $4.20 per share.
I'm inclined to believe that this makes Kimberly-Clark a reasonable bargain for the long-term. The dividend yield also is indicative of a decent buy. And as I look through the earnings release, I come away with a feeling that management is properly executing its efficiency initiatives. I'm sure there's room for improvement, and such initiatives tend to be disruptive at times to be sure, but overall, I see the company doing well in its ongoing fight with the economic slump. And the operational cash flow delivered by the business is doing pretty well, too.
Shares of Kimberly-Clark are up well over 5% as of this writing during afternoon trading. Forget putting in a buy order today. Wait for a better price. And remember that this company works better as a long-term play than one that is shorter-term in nature.
Disclosure: I don't own any company mentioned; positions can change without notice.
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