Kimberly-Clark shares fell by -1.8% during the day's afternoon session, and are now trading at a price of $118.7. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Kimberly-Clark's Valuation Is in Line With Its Sector Averages:
Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care and consumer tissue products worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, Kimberly-Clark has a trailing 12 month P/E ratio of 24.5 and a P/B ratio of 80.31.
Kimberly-Clark's PEG ratio is 1.93, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Shareholders Are Confronted With a Declining EPS Growth Trend:
| 2018-02-08 | 2019-02-07 | 2020-02-13 | 2021-02-11 | 2022-02-10 | 2023-02-09 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $18,348 | $18,486 | $18,450 | $19,140 | $19,440 | $20,175 |
| Gross Margins | 36.0% | 30.0% | 33.0% | 36.0% | 31.0% | 31.0% |
| Operating Margins | 18% | 12% | 15% | 17% | 13% | 13% |
| Net Margins | 12.0% | 8.0% | 12.0% | 12.0% | 9.0% | 10.0% |
| Net Income (MM) | $2,278 | $1,410 | $2,157 | $2,352 | $1,814 | $1,934 |
| Net Interest Expense (MM) | -$308 | -$253 | -$250 | -$244 | -$250 | -$268 |
| Depreciation & Amort. (MM) | -$724 | -$882 | -$917 | -$796 | -$766 | -$754 |
| Earnings Per Share | $6.4 | $4.03 | $6.24 | $6.87 | $5.36 | $5.65 |
| EPS Growth | n/a | -37.03% | 54.84% | 10.1% | -21.98% | 5.41% |
| Diluted Shares (MM) | 356 | 350 | 346 | 342 | 338 | 342 |
| Free Cash Flow (MM) | $3,714 | $3,796 | $2,494 | $3,698 | $2,687 | $2,721 |
| Capital Expenditures (MM) | -$785 | -$826 | $242 | $31 | $43 | $12 |
| Net Current Assets (MM) | -$9,058 | -$9,523 | -$10,032 | -$11,480 | -$11,509 | -$11,283 |
| Long Term Debt (MM) | $6,472 | $6,247 | $6,213 | $7,878 | $8,141 | $7,578 |
| Net Debt / EBITDA | 1.67 | 2.22 | 1.98 | 2.02 | 2.48 | 2.36 |
Kimberly-Clark has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and significant leverage. We also note that the company benefits from strong margins with a negative growth trend and wider gross margins than its peer group. However, the firm has declining EPS growth.
