Kenvue Surges as Earnings Beat, Kimberly-Clark Merger Gains Steam

"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."

"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. The company delivered full-year adjusted diluted EPS of $1.08, exceeding its guided range of $1.00 to $1.05."

"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."

Kenvue reported adjusted Q4 EPS of $0.27, beating the FactSet estimate of $0.22 by 23%, and delivered revenue of $3.78 billion versus a $3.68 billion consensus. Full-year net sales totaled $15.12 billion, a slight decline, while Q4 achieved 1.2% organic sales growth following three quarters of contraction. Full-year adjusted diluted EPS was $1.08, above guidance. Gross margin expanded to 59.1% in Q3 from 58.5% year over year, aided by supply-chain optimizations that continued into Q4. Management announced a global workforce reduction of about 3.5% with roughly $250 million of pre-tax charges, and the $48.7 billion Kimberly-Clark acquisition has shareholder approval and U.S. antitrust clearance, with closing expected in H2 2026 pending other approvals.

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