Episode Details

Kimberly-Clark Corporation (KMB) Q2 2026 — Q2 2026 (ended June 30): net sales $4,189M +0.6% (bar $4,225M, a small miss); organic sales -0.1%; adjusted EPS attributable to Kimberly-Clark $2.12 vs a $2.01 bar - a 5.5% BEAT, up 10.4% YoY; adjusted gross margin 38.8%, +190bp; adjusted operating profit $757M +6.2%; GAAP diluted EPS $1.04. North America $2,698M -1.2%, IPC $1,491M +4.0%. The 8-K was accepted 6:33am ET Tuesday Aug 4, before the open, so Aug 4 is the reaction session: +3.73% to $111.57. Last close Aug 7: $109.68. Almost every data feed shows Kimberly-Clark missing Q2 2026 by 10%: EPS of $1.80 against a $2.01 bar. The stock rose 3.73% that session. The feeds are wrong. The release contains FOUR different EPS for the quarter, and the $2.01 bar refers to Adjusted EPS Attributable to Kimberly-Clark, which came in at $2.12 - a 5.5% BEAT, up 10.4% YoY. We prove the basis in two lines: the feed's own stored Q1+Q2 2025 (1.93+1.92=3.85) and Q1+Q2 2026 (1.97+2.12=4.09) match the filed half-year adjusted ATTRIBUTABLE figures exactly, while the continuing-operations series ($3.25 and $3.40) does not. Two findings the coverage missed: free cash flow covered the dividend just 0.99x in 2025 (down from 1.75x in 2023) BEFORE the Kenvue deal, and the 2026 dividend raise was the smallest in a decade at +1.6%. And the guidance line nobody read: adjusted EPS attributable is guided to a low-single-digit DECLINE, even though continuing-ops EPS is guided to high-single-digit GROWTH. THE CALL: HOLD (3/5, A REAL BEAT THE SCREENS RECORDED AS A MISS - BUT ONLY 3.9% OF UPSIDE, AND THE DIVIDEND COVER BROKE IN 2025) — base-case value ~$114.0 vs ~$109.68 today. KEY METRICS: - CALL: HOLD 3/5, fair value $114 vs the $109.68 Aug 7 close (+3.9%). Bull $130 (85% synergy capture at 15x), bear $97 (40% capture at 13x). Standalone, no deal: $103. We would buy under $100. - Street: Hold, 31 analysts (9 buy / 19 hold / 3 sell), avg target $113, median $115.50. After the print: Piper Sandler $121 (from $115), Barclays $115 (from $101), UBS $115 (from $106) - three RAISES, no rating changes. What to watch: UP: Adjusted EPS attributable $2.12 beat the $2.01 bar and rose 10.4%; adjusted gross margin expanded 190bp to 38.8% with ZERO volume growth, which is what industry-leading productivity looks like; adjusted operating profit $757M +6.2%; North America operating profit +10.7% to $725M on tariff refunds and productivity; total debt fell from $7.2B to $6.5B; a 4.67% dividend yield; and the market is paying only about $6.70 a share for the entire $48.7B Kenvue transaction, which carries $2.1B of net run-rate synergies. DOWN: organic sales were MINUS 0.1% with volume flat and net price negative - all of the reported growth was currency; adjusted EPS ATTRIBUTABLE is guided to a low-single-digit DECLINE in 2026 against the $7.53 earned in 2025; free cash flow covered the dividend 0.99x in 2025; the China social-media diaper disruption cost ~50bp of organic sales, 140bp of IPC sales and 440bp of IPC operating profit and management says it worsens near term; the Kenvue deal issues 281.4M new shares (+84.6% share count) plus $6.73B of new debt, taking pro-forma leverage to ~2.8x; and the pro-forma dividend bill nearly doubles to $3.14B while $2.5B of integration cash goes out. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.