Kimberly-Clark is personal care corporation founded in 1872 in America. Company owns many brands of paper-based products – tissues, diapers, paper towels, toilet papers.

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(source: Company’s website)

The most recognizable brands are: Kleenex, Kotex, Cottonelle, Scott and Andrex, Wypall, KimWIpes, Huggies. Split of revenues and operating profit for segments is presented below:

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Also from geographical point of view sales is well diversified.

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Organically company is growing around 5% per year – this is growth driven by volume. Prices are stable. Strong USD is not favorable for company (sales denominated in USD dropped in last quarter by 12% due to currency issues). It is not heavy CAPEX business, but also products are not advanced – entry barriers are relatively low.

 

As it comes to financials (estimates):

Market cap ~ $45.8B

Net debt ~$6.5B

Payout ratio ~60%

ROE ~28%

Beta = 0.93

Estimated growth rate (g) = 0.4% * 28% = 11.2%

+ dividend yield 2.8% + buy-back, around $2B per year ~4.5%

 

Estimated valuation ratios:

P/E = 21.9

EV/EBITDA = 13.1

 

Kimberly-Clark is one of The Dividend Aristocrats. Similarly to other big consumer products giants share prices is about all-time high. Current dividend yield is around 2.8%. Historically in 2010-2011 it was more than 4% and there was nothing wrong with the company, so for me currently it is not a hot deal.

 

Drawdown risk:

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Similar findings can be found in drawdown risk analysis – share price on all-time high level is not interesting for me in any case. Moreover valuation is demanding.

 

Summing up, I like business for stability and cash generation, but with current prices I see no super deal for me. I think I will consider buying at around $100, which in fact was just few months ago…

 

Disclaimer KMB – no position