Earnings Previews: Kimberly-Clark, Cadence Bancorp

Earnings season takes a breather over the next couple of days before a blizzard of results hit the tape next week. Several of the world’s largest tech companies report earnings next week, along with more Dow Jones industrial average stocks.

In our preview yesterday, we covered railroader CSX and two of the Dow’s components, Intel and IBM. All three report after markets close on Thursday. Friday morning, the country’s largest oilfield services firm, Schlumberger, reports.

There are no companies scheduled to report results Friday afternoon. On Monday morning, we expect to hear from a Dividend Aristocrat and a regional bank that has seen shares pop over the past couple of weeks.

Kimberly-Clark Corp. (NYSE: KMB) is a classic consumer defensive play, selling products like Kleenex tissues, cleaning supplies and disposable diapers. While the share price has pulled back sharply from 52-week highs posted in August, demand for cleaning products as the country continues to battle the COVID-19 pandemic could give the stock a shot in the arm. Earlier this month, analysts at Bernstein initiated coverage on the stock with a Market Perform rating and a price target of $142, while Deutsche Bank maintained its Hold rating as it lowered its price target from $150 to $144.

In 2020, Kimberly-Clark shares rose by just 1%. For the year to date, they trade down about 3%. The consensus fourth-quarter earnings per share (EPS) estimate is $1.60, down more than 6% year over year, and the full-year estimate calls for EPS of $7.66, an improvement of more than 11% compared with 2019 EPS. Quarterly revenue is expected to increase by about 2.7% to $4.71 billion, and full-year revenue is forecast to rise by 3.1% to $19.01 billion. Shares are trading at about 14.4 times expected 2020 earnings and at the same multiple to expected 2021 earnings. Kimberly-Clark pays an annual dividend of $4.28, for a yield of 3.26%, and is among the Dividend Aristocrats that have increased their dividends every year for at least 25 consecutive years.

Cadence Bancorp. (NYSE: CADE) is a regional bank with a market cap of around $2.6 billion that operates around 100 branch offices in the southeastern United States. In the first week of this month, the company announced that it expects to recognize a $165 million to $175 million increment to its hedging revenue during the fourth quarter. Cadence’s third-quarter revenue totaled around $186 million, so the added amount is definitely significant. The bank is also evaluating a potential dividend increase, resuming share buybacks that were stalled by the pandemic and repaying more debt.

The bank’s share price declined by 6.5% in 2020 but has added nearly 24% since the beginning of the year, largely due to the expected boost from closing out its hedge. Fourth-quarter EPS is forecast at $1.48, up by 270% from $0.40 a year ago. For the full year, the consensus EPS estimate is $1.57, down about 8.7% from $1.72 in 2019. Shares trade at a multiple of 19.1 to expected 2020 EPS and 13.2 to expected 2021 earnings. Cadence pays an annual dividend of $0.30 per share, for a yield of 1.46%.

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