Stocks: Kimberly-Clark drops on lower guidance, Mattel jumps after winning Disney princess license

Yahoo Finance's Julie Hyman and Brian Sozzi discuss Kimberly-Clark's earnings and Mattel's booming stock after winning back the Disney Princess license from Hasbro.

Video Transcript

JULIE HYMAN: There's actually some suspense today. There's not always suspense around in the FOMC. But I'm liking a little suspense.

BRIAN SOZZI: Well, let's create some, Julie.

JULIE HYMAN: --a little bit of unexpected stuff. No, there is suspense this time. We don't know exactly what he's going to say.

All right, let's talk about some other earnings reports real quick. Let's start with Kimberly-Clark. That company coming out with guidance that trailed estimates. This is after-- you see the shares are down about 5 and 1/2 percent. The earnings last quarter actually beat estimates, and sales did too. Sales were up 2.7% last quarter. So it's really the forecast here that is to blame for what's going on.

Earnings per share this year are going to be, at most, $6. Analysts have been looking for $6.72. So that beat last quarter and the fourth quarter. Less relevant, I guess, when it comes to where the shares are trading today.

So some of this has to do with costs, of course. The CEO saying we expect inflation and supply chain disruptions to persist into 2022. We are committed to recovering margins to pre-pandemic levels over time, though. And we're optimistic about gradual recovery later in the year.

I mean, we'll see. It doesn't look like that there is a lot of that optimism baked into those numbers.

BRIAN SOZZI: This quarter didn't do it for me, Julie, at all. This is just another challenging quarter from Kimberly-Clark, which is, I would say, challenging quarters from this company were the hallmark or just consistently happened last year. I want to highlight two numbers. One, in this quarter, since inflation is going to be top of mind today at the Federal Reserve meeting, Kimberly-Clark noting they had $530 million in input cost inflation in the fourth quarter for all of last year.

For all of last year, 1 and 1/2 billion dollars in input cost inflation, that is major money that is weighing on Kimberly-Clark's operating profits here. They're forecasting even more inflation in the hundreds of millions of dollars this year. So they're going have to push through a lot of price increases on toilet paper and other products here just to help alleviate those pressures and just support margins here.

But look, the way to play this space, it has been proven out the past year. If you're inclined to play consumer products and that stay-at-home trade, it is Procter & Gamble. Procter & Gamble's results, stack those up alongside Kimberly-Clark, and they continue to be very striking.

JULIE HYMAN: Consumer products-wise, I guess more discretionary consumer products, toys, that segue. But anyway, let's talk about what's going on with Mattel here this morning. The shares are up by almost 7%. And Hasbro and Mattel have sort of ping-ponged back and forth the Disney rights over the years.

Mattel winning back that license this morning. Disney princesses and the "Frozen" movies are what they're getting in this deal, this multiyear global licensing agreement. The new collection going to go on sale at the beginning of 2023.

It lost these rights, Soz. I didn't realize it had been so long. Back in 2016, so obviously this is a big deal for them.

BRIAN SOZZI: Big deal. And this is a big win for Mattel CEO Ynon Kreiz, who's been a frequent guest on our airways. He has led, really, a complete transformation of Mattel, cut out hundreds and millions of costs, realigned the business here. And he has a strong resume with content and studios and filmmaking.

And I think this deal is really indicative of all those things coming together, where he can reach out to Disney and say, hey, guys, we are running a tighter ship here at Mattel. I am also rolling out more new content. Let's get this brand, this key brand, back in-house.

Now, Stephanie Wissink, also a friend of the show, analyst at Jefferies, sending me a note just now. This business could add about $250 million in revenue for Mattel once these dolls start to be made in 2023.

Now, while it's a loss for Hasbro, let's keep in mind, Hasbro is a very diversified company. They did come out today saying that they won a "Indiana Jones" toy license from Disney, very key. They're also major in the content business as well via an acquisition they made about a year and a half ago. So the battle is on. The battle is on.

JULIE HYMAN: Yeah. I'm curious who has the "Encanto" rights, right? That's that newer hit movie from Disney, because I don't know. The protagonist there, does she count as a princess? She's not really a princess? But the song associated with that movie has been a huge hit.

BRIAN SOZZI: I'm more of a He-Man license. And I believe Mattel relaunched that last year. So I picked up a couple of He-Man dolls for my nephews. And they really liked it. Nice.

JULIE HYMAN: All right, you got to do that in content research for me, please. And report back, Soz.

Quick check on Microsoft here before we go to break, since that is the big earnings report, really, of the day that folks are reacting to. And it's giving a little bit of a lift, I think it's safe to say, or at least an excuse to buy for folks who were looking at some of these battered tech stocks. The shares are up 5% here.