Will This Downgrade Hurt Kimberly-Clark (KMB) Stock On Monday?

NEW YORK (TheStreet) -- Kimberly-Clark Corp. (KMB) was downgraded to "hold" from "buy" at Argus Research on Monday.

The firm said it lowered its rating on the company which manufactures and markets products made from natural or synthetic fibers based on a valuation call, higher commodity costs and foreign currency headwinds.

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

"We rate KIMBERLY-CLARK CORP (KMB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, growth in earnings per share, expanding profit margins, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • KIMBERLY-CLARK CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KIMBERLY-CLARK CORP increased its bottom line by earning $5.54 versus $4.42 in the prior year. This year, the market expects an improvement in earnings ($6.11 versus $5.54).
  • 38.82% is the gross profit margin for KIMBERLY-CLARK CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.19% trails the industry average.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Household Products industry and the overall market on the basis of return on equity, KIMBERLY-CLARK CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • You can view the full analysis from the report here: KMB Ratings Report
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