Kimberly-Clark Corporation (KMB) shares rose more than 6% after the manufacturer of personal care products reported better-than-expected first quarter financial results. Revenue fell 2.1% to $4.63 billion, beating consensus estimates by $80 million, while non-GAAP earnings per share came in at $1.66, beating consensus estimates by 11 cents per share.
The better-than-expected results were fueled by a 4% increase in pricing that helped offset a 2% decline in volume. The company also generated $115 million in cost savings during the quarter and returned $510 million to shareholders through dividends and share repurchases. In addition, operating margins were 17.4% versus a 16.6% consensus.
Management expects to generate between $500 million and $550 million in pre-tax cost savings by the end of 2021, driven by workforce reductions and manufacturing supply chain efficiencies. These efforts will involve pre-tax restructuring charges of $1.7 billion to $1.9 billion by the end of 2020 but could pave the way toward profitability improvements.
From a technical standpoint, Kimberly-Clark stock broke out from a rising wedge pattern to R2 resistance at $131.27. The relative strength index (RSI) rose to overbought levels with a reading of 85.48, while the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation before resuming its trend higher over the coming months.
Traders should watch for consolidation between R1 resistance at $127.58 and R2 resistance at $131.27 over the coming sessions. A breakout from these levels could lead to a retest of prior highs made in mid-2017 or highs made in mid-2016. If the stock breaks lower, traders could see strong support at around $124.00, although that scenario seems less likely to occur given the recent strength.
The author holds no position in the stock(s) mentioned except through passively managed index funds.