Kimberly Clark (KMB) Stock Gaining Today After Analyst Upgrade

NEW YORK (TheStreet) -- Shares of Kimberly-Clark Corp. (KMB) - Get Report are gaining, up 1.11% to $110.20 in pre-market trading Tuesday, after the company had its rating raised to "outperform" from "market perform" by analysts at Wells Fargo earlier this morning.

The firm noted that its upgrade is a relative call based on a long-term view.

Wells Fargo believes that fears of competition have been overblown. It noted a "favorable risk/reward compared to the broader staples group for what we see as an under-appreciated emerging markets growth engine."

The firm set a valuation range of $117 to $120.

"We believe that Kimberly-Clark is the most improved, and one of the more underrated companies across the HPC group," Wells Fargo said in a note.

Dallas, TX-based Kimberly-Clark is a consumer product company with brands including Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend.

The company is engaged in the manufacturing and marketing of a range of products made from natural or synthetic fibers.

It operates and markets its products globally in Asia, Latin America, Eastern Europe, the Middle East and Africa, with an emphasis in China, Russia and Latin America.

Separately, TheStreet Ratings team rates KIMBERLY-CLARK CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate KIMBERLY-CLARK CORP (KMB) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Products industry and the overall market, KIMBERLY-CLARK CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
• KMB, with its decline in revenue, slightly underperformed the industry average of 4.9%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• KIMBERLY-CLARK CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, KIMBERLY-CLARK CORP reported lower earnings of $3.90 versus $5.54 in the prior year. This year, the market expects an improvement in earnings ($5.72 versus $3.90).
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Products industry. The net income has significantly decreased by 115.4% when compared to the same quarter one year ago, falling from $539.00 million to -$83.00 million.
• The debt-to-equity ratio is very high at 9.54 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
• You can view the full analysis from the report here: KMB Ratings Report