If you were to quickly think up the stocks that benefited most from the pandemic-induced economic changes, you'd probably have two groups of stocks.
The first are the tech companies that were in the right place at the right time, such as Zoom Video (ZM). The second would be consumer staples companies that benefited from the need to stock up for essentials. That is, firms such as Clorox (CLX) and Kimberly-Clark (NASDAQ:KMB). Something funny happened along the way though. While Clorox is still up big year-to-date, many of the other staples stocks have given back a chunk of their pandemic gains. And few more so than KMB stock; in fact, Kimberly-Clark shares are now down year-to-date:
As you can see, the stock has dropped 15% over the past couple of weeks and has now given up any gains it had from earlier this year. So much for everyone rushing to grab extra toilet paper for the pantry.
Weak Quarter, But A Strong 2020 Overall
As the chart shows, Kimberly-Clark stock's decline accelerated recently. That coincided with a downbeat earnings report where revenues only grew by 1% year-over-year while earnings missed expectations and fell compared to the same quarter in 2019.
At first, that probably sounds bad. When you look through the quarterly results, however, you see a few Covid-related factors. For one, certain spending items were deferred in the peak of the virus earlier this year and thus showed up now; Kimberly-Clark had higher costs in several areas including incremental investments to boost capacity. They also ramped up advertising once again.
At the same time, sales in the professional side of the business were down significantly. That makes perfect sense, as sales to commercial clients such as restaurants, offices, and shopping centers would be down with fewer people using those facilities for the time being.
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