With a portfolio of leading brands and an expansive global distribution network, Kimberly-Clark continues to withstand the challenges resulting from intense competitive activity and lackluster macro conditions. Management raised the lower end of its full-year adjusted earnings per share expectations to $5.65-$5.75 (from $5.60 and compared with our forecast of $5.71), partly reflecting a lower tax rate and share count. Our $93 fair value estimate remains in place, but at nearly 17 times our fiscal 2014 earnings estimate, the shares strike us as a little inflated, as Kimberly’s product categories are susceptible to consumer trade-down.

Third-quarter sales (excluding foreign currency movements and divestitures) ticked up 5% from a year ago, reflecting 3% higher volume, a 1% increase in prices, and a 1% benefit from mix. Across the business, international was again the highlight, with 10% year-over-year growth (more impressive as it came on top of 9% growth last year).

Underlying sales growth was fairly balanced from a segment perspective among personal-care sales (up 6%), consumer tissue (5%), professional (6%), and health care (4%). We recognize that competitive pressures loom; management specifically cited increased promotional activity in the North American diaper market, where its Huggies brand goes to bat against Procter & Gamble’s Pampers lineup on a daily basis.

As such, we expect new products and marketing will remain the crux of the firm’s strategic efforts. But even more crucial, in our view, will be ensuring the firm’s brands and products remain top of mind for consumers. Adjusting for one-time charges–to restructure the pulp and tissue segment and exit the bulk of the European diaper business–gross margins increased 20 basis points to 34.4%, and operating margins edged higher by 10 basis points to 15.6%. Longer term, we forecast nearly 5% annual sales growth and operating margins approaching 17%.