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Are Kimberly-Clark and Procter & Gamble Worth Buying Now?



Procter & Gamble's share price also may have peaked for now, even though the company intends to win the competition for the best diaper in the business. Its Pampers brand still lags Kimberly-Clark's Huggies in the North American diaper sales derby by about 8%.

P&G steps into the earnings confessional on Wednesday, April 23, before the market opens. If first-quarter earnings per share exceed $1.02, that should be a positive for the stock, but I expect revenue to be flat compared to the year-ago quarter. After a precipitous sell-off at the beginning of 2014, the share price of P&G recovered.

PG Chart

PG data by YCharts


The company maintained a robust 19% trailing 12-month operating margin, 3% higher than Kimberly-Clark. P&G's current $2.57 annual dividend yields 3.17% for investors who buy at $81 a share. The company's nearly $9 billion levered free cash flow should help maintain this attractive yield, although the payout ratio is a high 64%.

If you don't already own shares, you may want to buy after P&G reports. Don't be surprised if shares correct below $80 and test the March 21 low of $77.88 between now and the next quarterly report in July.

At the time of publication, the author had a position in PG but no position in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.
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