Barbarian At The Gate: Kimberly-Clark (KMB)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Kimberly-Clark ( KMB) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Kimberly-Clark as such a stock due to the following factors:

  • KMB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.5 million.
  • KMB has traded 793,648 shares today.
  • KMB traded in a range 217.5% of the normal price range with a price range of $1.94.
  • KMB traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on KMB:

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care, consumer tissue, and health care products worldwide. It operates through four segments: Personal Care, Consumer Tissue, K-C Professional, and Health Care. The stock currently has a dividend yield of 3.1%. KMB has a PE ratio of 19.4. Currently there are no analysts that rate Kimberly-Clark a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Kimberly-Clark has been 1.5 million shares per day over the past 30 days. Kimberly-Clark has a market cap of $40.3 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.13 and a short float of 1.4% with 3.94 days to cover. Shares are up 1.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kimberly-Clark as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • KMB's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $842.00 million or 46.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.55%.
  • KIMBERLY-CLARK CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($6.09 versus $5.54).
  • 38.87% 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 9.52% trails the industry average.

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