There May Be Reason For Hope In Kimberly-Clark's (NYSE:KMB) Disappointing Earnings

The market was pleased with the recent earnings report from Kimberly-Clark Corporation (NYSE:KMB), despite the profit numbers being soft. However, we think the company is showing some signs that things are more promising than they seem.

Check out our latest analysis for Kimberly-Clark

The Impact Of Unusual Items On Profit

For anyone who wants to understand Kimberly-Clark's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$664m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Kimberly-Clark doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Kimberly-Clark's Profit Performance

Because unusual items detracted from Kimberly-Clark's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Kimberly-Clark's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Kimberly-Clark as a business, it's important to be aware of any risks it's facing. For example - Kimberly-Clark has 3 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Kimberly-Clark's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.