The latest earnings season in 2024 Q2 has brought a wave of positivity, showcasing resilience across various sectors. Companies are set to witness positive earnings growth, a trend expected to persist in the upcoming periods.
Amidst this backdrop, the Technology sector has been a standout performer, continuing its trend from previous quarters. Notably, several companies have reported margin expansion, driving higher profitability.
The Defensive Nature of Kimberly-Clark
Kimberly-Clark’s positioning within the consumer staples sector provides it with a defensive nature, ensuring consistent demand for its products in various economic conditions.
The stock holds a favorable Zacks Rank #2 (Buy), with analysts increasingly optimistic about its earnings performance for the current fiscal year following recent guidance updates.
Cost management strategies have significantly contributed to the company’s profitability, with a notable 20% year-over-year increase in adjusted EPS to $1.96 in the latest quarter. Margin expansion has been a key driver of investor satisfaction.
Charting its course over the trailing twelve months, Kimberly-Clark has demonstrated strong margin growth, as depicted below:
Image Source: Zacks Investment Research
Deckers Outdoor and its Brand Momentum
Deckers Outdoor has been riding on continued brand momentum, particularly boosted by the success of UGG and Hoka shoes, reflecting in robust performance. This has led to an upward revision in its outlook for the current fiscal year.
Analysts have adjusted their forecasts in line with the company’s growth prospects, with a Zacks Consensus EPS estimate of $31.52 suggesting an 8% year-over-year increase.
Maintaining a trend of margin expansion, Deckers Outdoor has sustained its profitability trajectory. In the most recent report, the company’s gross margin grew to 56.9% from 51.3% in the previous year.
The chart below illustrates the margin expansion trend over the trailing twelve months:
Image Source: Zacks Investment Research
Skechers: Record Sales Amidst Challenges
Despite challenges, Skechers achieved record sales in the latest quarter. However, a 7% decline in EPS alongside a 7% rise in sales, missing Zacks Consensus estimates, broke a streak of positive surprises for the company.
Notably, the quarterly sales of $2.2 billion set a new record, with a significant 9.2% year-over-year growth in Direct-to-Consumer (DTC) sales. This growth underscores a strong market position for Skechers.
Following the trend of DECK, Skechers witnessed margin expansion as a result of reduced freight and unit costs, leading to a 220 basis points improvement in gross margin to 54.9%. The company has historically shown robust margins, as evidenced below:
Post-earnings report, positive revisions for its current fiscal year have been noted, with Skechers holding a favorable Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Concluding Thoughts
The earnings season has seen several companies, including Deckers Outdoor (DECK), Kimberly-Clark (KMB), and Skechers (SKX), bolster their profitability metrics, showcasing resilience and growth in challenging times.
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