Kimberly-Clark is consumer product producer which, about which I wrote in December and I found it rather as a pricey company, which generates a lot of money (read more). Well since December there were some ups and downs of share price, but after a half year price is more or less the same. So I was right J Is it a good time to buy shares now?

Business is doing well/in line with expectations (especially when adjusted for other expenses in 2015, which were exceptionally high.

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There is a decent growth in dividends – 4.5%. This slide from Q2 presentation I like the most is presented below.

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With market cap of $46b we can expect 4.4% return to shareholders yield, not bad, but I expect more.

Outlook for 2016:

  • Currency translation to reduce sales by 4 to 5 percent
    • Prior assumption was for a negative impact toward the low end of the 5 to 6 percent range
  • Expect organic sales growth will be at low end of 3 to 5 percent target range
    • Assumes less benefits from selling price increases, primarily due to improved currency outlook
    • Volume growth (3 percent year-to-date) should drive vast majority of organic sales growth for full-year
  • Continue to expect adjusted EPS of $5.95 to $6.15, up 3 to 7 percent year-on-year
    • High-single digit drag from combined impact of changes in currencies, commodities and selling prices
    • Adjusted effective tax rate should be higher sequentially in the back half of the year
    • Continue to closely watch currency and commodity markets, competitive activity and economic conditions

Well, it is broadly in line with previous expectations.

Valuation is rather demanding:

EV/EBITDA = 13

P/E = 21

I understand that company deserves a premium for quality, but still in my opinion downside risk is higher than upside.

 

Summing up, KMB is a good and long lasting business, but currently I see no reason to buy shares.

 

Disclaimer KMB – no position