Analyst Note| Erin Lash, CFA |
We see little in Kimberly-Clark’s fourth-quarter and fiscal 2020 results to warrant a material change in our $124 fair value estimate, outside of a modest bump to account for additional cash generated since our last update. Fourth-quarter organic sales ticked up at a 5% clip, reflecting a 3% benefit from higher prices and a 2% increase in volumes. While COVID-19 induced demand continues to bolster the firm’s personal care (up 5%) and consumer tissue (up 14%) operations (about 85% of total sales), its professional arm remains challenged (down 9%). However, the slump in professional sales is moderating (from the 10%-15% downdrafts chalked up in each of the past two quarters). While we view this as a slight positive, we don’t expect the pressures stand to entirely abate near term, given 50% of its mix is washroom products for offices and travel locations, which have been largely devoid of traffic since the emergence of the pandemic.