Kimberly-Clark Earnings: Gross Margin Bouncing Back, but Inflationary and Competitive Angst Persist

We don’t foresee a material change to our $134 fair value estimate (beyond time value) for Kimberly-Clark after digesting solid second-quarter marks—5% organic sales growth and a 380-basis-point increase in gross margin to 34%. Management bumped up its full-year outlook to 3%-5% organic sales growth (from 2%-4%) and to 10%-14% adjusted EPS growth (from 6%-10%), but the market was less enthusiastic, sending shares down around 4%, leaving the stock in a range we’d consider fairly valued.