Monday Morning Market Highlights

US Markets

U.S. stocks were mixed on Monday morning, with some companies reporting better-than-expected earnings. The Dow fell more than 200 points to 30,779, the S&P 500 index gained 0.14% to 3,846 and the Nasdaq Composite Index was up 1.14% to 13,697.

Gainers

• Apple (NASDAQ:AAPL) +3.9%

• D.R. Horton, Inc. (NYSE:DHI) +3.1%

• Discovery, Inc. (NASDAQ:DISCA) +3.3%

• Biogen (NASDAQ:BIIB) +1.7%

• Cisco Systems (NASDAQ:CSCO) +0.5%

Losers

• Carnival Corporation (NYSE:CCL) -5.4%

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• Expedia (NASDAQ:EXPE) -5.2%

• Halliburton Co (NYSE:HAL) -2.6%

• Devon Energy Corp (NYSE:DVN) -2.6%

• The Sourthern Company (NYSE:SO) -0.9%

Global Markets

The main European stock markets traded in the red. The U.K.'s FTSE 100 retreated 1.02%, Germany's Dax dipped 1.34%, France's CAC 40 slid 1.34% and Spain's Ibex 35 lost 1.37%.

In Asia, Japan's Nikkei 225 gained 0.67%, India's BSE Sensex slid 1.09%, Hong Kong's Hang Seng rose 2.41% and China's Shanghai Composite was up 0.48%.

Kimberly-Clark releases earnings report

Shares of Kimberly-Clark Corporation (NYSE:KMB) gained more than 3.5% on Monday morning after the company announced financial results for its fourth quarter of fiscal 2021. It posted earnings per share of $1.69, beating analysts' estimates by 7 cents, on revenue of $4.84 billion, which grew 5.7% year-over-year and beat expectations by $110 million.

CEO Mike Hsu had the following to say:

"In 2020, we grew organic sales 6%, with healthy underlying performance and increased demand because of COVID-19. We also significantly increased brand investments and improved our market share positions. In addition, we achieved $575 million of cost savings and returned $2.15 billion to shareholders through dividends and share repurchases. Finally, we grew adjusted earnings per share 12%, well above our medium-term objective. I'm extremely proud of what our teams accomplished while staying relentlessly focused on employee health and safety and meeting the needs of our consumers during this unprecedented time period."

By segment, fourth quarter Personal Care sales were $2.3 billion, up 5%. Volumes increased 3% and net selling prices and product mix each improved by 1%. The operating profit was $401 million, down 10% year-over-year, principally due to manufacturing cost increases, higher advertising spending and general and administrative costs and unfavorable currency effects.

In the Consumer Tissue Segment, sales were $1.7 billion, up 14%. The operating profit was $337 million, up 20% due to costs savings.

In the K-C Professional (KCP) segment, sales were $700 million, down 9%. The operating profit was $105 million, down 38% because of lower volumes, manufacturing cost increases, higher input costs and general and administrative costs.

The company's overall operating profit reached $749 million in 2020, a bit less than $751 million the prior year. They include charges related to the 2018 Global Restructuring Program and the Softex Indonesia acquisition as well as a favorable tax matter in Brazil.

Looking at cash generation, the company generated cash from operations of $887 million versus $924 million in the same quarter of 2019. However, in the full year, the cash provided by operations reached an all-time high of $3.72 billion compared to $2.73 billion in 2019 due to improved working capital and higher earnings.

The total debt was $8.4 billion at the end of 2020, higher than $7.7 billion at the end of 2019.

The company's Board of Directors has approved an increase in the quarterly dividend of 6.5%. It also authorized a new $5 billion share repurchase program.

Looking ahead, the company expects net sales in 2021 to increase 4% to 6%, including organic sales growth of 1% to 2%. It also projects diluted net income per share to be between $7.10 and $7.60 and adjusted earnings per share in the range of $7.75 to $8.00.

At the end of December, T Rowe Price Equity Income Fund (Trades, Portfolio) reduced its investment in the stock by 9% to 1,205,000 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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