Kimberly-Clark's (KMB) Q2 earnings beat showed the company can deliver steady profit growth despite cost swings and operational disruptions, RBC Capital Markets said Wednesday in a report.

Adjusted earnings were $2.12 per share, above the $2 consensus estimate, as cost savings, supply-chain productivity and a $45 million tariff refund offset a revenue miss. Sales were pressured by US retailer destocking, a fire at a Los Angeles distribution center and disruption in China's diaper market following social media claims about product quality, the report said.

Profit and margins would have been roughly in line with expectations even without the tariff refund, supporting the view that Kimberly-Clark's organizational redesign and improved cost management are strengthening its earnings performance, the report said.

Management lowered its 2026 outlook, partly reflecting the China disruption, which is expected to reduce H2 operating profit by $70 million, the report said. RBC cut its full-year earnings estimate to $7.43 a share from $7.65.

RBC remained positive on Kimberly-Clark's planned acquisition of Kenvue (KVUE), expected to close in Q4. Management said integration planning is ahead of expectations and that the estimated $1.9 billion in cost savings is achievable with potential upside, according to the report.

RBC maintained its outperform rating on Kimberly-Clark stock and its $162 price target.

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