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Kimberly-Clark Corp KMB

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Morningstar’s Analysis

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Consumers Add Kimberly-Clark's Fare to Their Carts, but Investors Shouldn't Stock Up on Shares

Erin Lash, CFA Sector Director

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.

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Company Profile

Business Description

Kimberly-Clark is a leading manufacturer of personal care (around half of sales) and tissue products (roughly one third of sales). Its brand mix includes Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Cottonelle. The firm also operates K-C Professional, which partners with businesses to provide safety and sanitary products for the workplace. Kimberly-Clark generates just over of half its sales in North America and more than 10% in Europe, with the rest primarily concentrated in Asia and Latin America.

P.O. Box 619100
Dallas, TX, 75261-9100
T +1 972 281-1200
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 46,000