Is it safe to buy Kimberly-Clark stock after disappointing Q3 results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 25, 2021
  • Kimberly-Clark shares on Monday plunged after announcing its most recent quarterly results.
  • The company reported its fiscal Q3 earnings before markets opened, missing analyst estimates.
  • However, KMB’s revenue for the quarter came in slightly higher than the consensus Street forecast.

On Monday, Kimberly-Clark Corporation (NYSE:KMB) shares fell by more than 5% after announcing its fiscal third-quarter results. The company reported its most recent quarterly results before the market opened, missing analyst expectations on earnings. However, KMB’s revenue for the quarter edged higher, outperforming the average for analyst estimates.

The company posted FQ3 non-GAAP earnings per share of $1.62, missing the consensus Street estimate of $1.65. In addition, its GAAP EPS of $1.39, was $0.19 below estimates, while the quarterly revenue increased by 7.1% from the same period a year ago, $50 million ahead of the average for analyst forecasts.

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Moreover, Kimberly-Clark lowered its fiscal FY2021 earnings guidance to $6.05-$6.25 from $6.65-$6.90, well below the average Street forecast of $6.70.

Is KMB stock overvalued?

From an investment perspective, Kimberly-Clark shares trade at reasonable trailing 12-month and forward P/E ratios of 21.40 and 16.73, respectively. Therefore, some value investors could find it as an exciting option for their portfolios.

However, given the company’s recent quarterly earnings miss, the current analyst earnings forecasts of 10% this year and 11.44% next year may be overstated.

Therefore, although the stock is down nearly 6% this year, it may not be time to buy KMB shares.

Source – TradingView

Technically, Kimberly-Clark shares seem to be trading within a descending channel formation following Monday’s post-earnings plunge. As a result, the stock has moved closer to the oversold conditions of the 14-day RSI.

In addition, the KMB stock price has fallen to retest the trendline support, creating an opportunity for a rebound. Therefore, investors could target short-term rebounds at about $131.43, or higher at $136.34, while $122.30 and $116.48 are support levels.

It may not be time to buy KMB shares

In summary, although Kimberly-Clark shares have plummeted to trade at a new 52 week low of about $125.32, the stock still seems to be trading under immense bearish pressure whilst lacking catalysts for a potential rebound.

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