KMB

Assessing the Validity of Bearish Sentiment Towards Kimberly-Clark (KMB)

Kimberly-Clark may be undervalued with poor growth indicators, but the 17 analysts following the company give it an rating of hold. Their target prices range from $125.0 to $175.0 per share, for an average of $148.88. At today's price of $140.51, Kimberly-Clark is trading -5.62% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care and consumer tissue products in the United States. Based in Dallas, TX, the Large-Cap Consumer Discretionary company has 41,000 full time employees. Kimberly-Clark has provided a 3.5% dividend yield over the last 12 months.

Kimberly-Clark has a trailing twelve month P/E ratio of 20.8, compared to an average of 22.15 for the Consumer Discretionary sector. Considering its EPS guidance of $7.6, the company has a forward P/E ratio of 18.5.

Kimberly-Clark is also overpriced compared to its book value, since its P/B ratio of 41.68 is higher than the sector average of 3.11. The company's shares are currently 689.8% below their Graham number, indicating that its shares have a margin of safety.

If analysts are willing to give the company a bad rating despite its potentially attractive valuation, its likely that they are concered by Kimberly-Clark's lacking growth potential, as signaled by its 2.0% rate of revenue growth, and capital expenditures that are only growing at -6.0% on average each year.

2018 2019 2020 2021 2022 2023
Revenue (M) $18,486 $18,450 $19,140 $19,440 $20,175 $20,431
Gross Margins 30% 33% 36% 31% 31% 34%
Net Margins 8% 12% 12% 9% 10% 9%
Net Income (M) $1,410 $2,157 $2,352 $1,814 $1,934 $1,764
Net Interest Expense (M) $263 $261 $252 $256 $282 $293
Depreciation & Amort. (M) $882 $917 $796 $766 $754 $753
Diluted Shares (M) 350 346 342 339 338 339
Earnings Per Share $4.03 $6.24 $6.87 $5.35 $5.72 $5.21
EPS Growth n/a 54.84% 10.1% -22.13% 6.92% -8.92%
Avg. Price $93.0 $113.35 $127.64 $124.85 $126.0 $140.51
P/E Ratio 22.96 18.05 18.5 23.21 21.99 26.92
Free Cash Flow (M) $2,093 $1,527 $2,512 $1,723 $1,857 $2,776
CAPEX (M) $877 $1,209 $1,217 $1,007 $876 $766
EV / EBITDA 12.71 11.86 12.79 15.19 14.74 17.6
Total Debt (M) $7,455 $7,747 $8,364 $8,574 $8,422 $7,984
Net Debt / EBITDA 2.22 1.87 2.0 2.5 2.33 2.23
Current Ratio 0.77 0.73 0.8 0.82 0.78 0.82
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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