Kenvue (NYSE: KVUE) reported fourth-quarter results yesterday that exceeded analyst expectations, with adjusted EPS of $0.27 beating the FactSet estimate of $0.22 by 23%. Revenue of $3.78 billion topped the $3.68 billion consensus, marking a solid finish to a year otherwise defined by declining sales. This morning, the stock traded at $18.41, up 1.3% over the past week and 7.0% higher over the past month. The momentum appears tied to both the earnings beat and continued progress on the pending Kimberly-Clark acquisition.
Beat on Both Lines, but Full Year Still Declined
The fourth-quarter performance represented a notable improvement from earlier in 2025. While full-year net sales of $15.12 billion showed a slight decline, Q4 demonstrated organic sales growth of 1.2% after three consecutive quarters of contraction. CEO Kirk Perry, who was confirmed as permanent CEO during the quarter, emphasized disciplined execution. The company delivered full-year adjusted diluted EPS of $1.08, exceeding its guided range of $1.00 to $1.05.
What stands out is the margin performance. Despite revenue headwinds throughout 2025, the company maintained operational discipline. In Q3, gross margin expanded to 59.1% from 58.5% year over year, driven by supply chain optimizations. That efficiency carried into Q4, helping the bottom line exceed expectations even as topline growth remained modest.
Restructuring Ahead, Acquisition on Track
Management announced a global workforce reduction of approximately 3.5%, with pre-tax restructuring charges of roughly $250 million expected in fiscal 2026. The move signals a focus on cost discipline as the company prepares for integration with Kimberly-Clark. That $48.7 billion all-stock-and-cash deal received overwhelming shareholder approval in January 2026 and is expected to close in the second half of 2026. U.S. antitrust clearance has been secured, though other regulatory approvals remain pending.
The stock is trading near the implied deal value of $19.10 to $19.50 per share, with a spread of roughly 4%. Activist investor Starboard Value increased its stake during the quarter. Director Jeffrey C. Smith purchased 3.2 million shares for approximately $55.58 million, a notable increase in insider ownership. Notably, Kenvue did not host an earnings call due to the pending transaction, limiting forward guidance visibility.
What Investors Should Watch
With the merger timeline extending into the second half of this year, attention shifts to regulatory clearance milestones and integration planning. The company also launched its Neutrogena Evenly Clear product line in February 2026, signaling continued brand investment despite the acquisition. The dividend yield sits at 4.5%, though the payout ratio above 110% raises sustainability questions post-merger. Key areas to monitor include whether the restructuring delivers the targeted savings and how the combined entity plans to address competitive pressures in both consumer health and personal care markets.
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