Kimberly-Clark (NYSE:KMB) is a company that creates quality
products, born of continual innovation and technology leadership.
The company is focused on three global businesses: Tissue,
Personal Care, and Health Care and Other.
With manufacturing facilities in 40 countries and sales in more
than 150, the company is the leading tissue manufacturer in the
world. Kimberly-Clark is also the second largest household and
personal care products company in the United States. The
company's global brands include Huggies, Pull-Ups, Kotex,
Depend, Kleenex, Scott, Kimberly-Clark, Tecnol, Kimwipes and
Wypall. Other brands well known outside the U.S. include Andrex,
Scottex, Page, Poppee and Kimbies.
As a Fortune 500 company, Kimberly-Clark enjoys annual sales of
more than $12 billion. Since 1983, the company has been
distinguished as one of Fortune magazine's "Most Admired"
corporations. And the company is dedicated to sustained
profitable growth that will continue.
(source: Kimberly Clark)
Reasons To Invest
The management at Kimberly-Clark has strived to transform the
company into a consumer products giant, with a suite of dominant
consumer brands comprised of tissue, personal care and health
care products. It may seem surprising, but Kimberly-Clark has
managed to utilize technological advances to manage costs and
drive sales growth. Those gains have allowed the company to gain
market share from many of its competitors. The capturing of
market share and strong brands lend to Kimberly-Clark's
predictable and steady earnings and sales growth. And in a
consumer products maker, the market likes predictability.
Kimberly-Clark is expected to grow its earnings by 11.5 percent
annually over the next several years, which is in-line with its
sector counterparts, but slightly below that of the average
earnings growth of the broader market as measured by the S&P 500.
However, shares of Kimberly-Clark do sell at a relative discount
and represent a good value at current levels. The company's
stock sells for roughly 18 times earnings, which is in-line with
historical norms for Kimberly-Clark but well below the S&P's
average of roughly 22 times earnings. Furthermore, the company's
balance sheet is very solid and the firm is generating solid
cash flow, which is a testament to the strength of its products.
Finally, there are two macro issues that are in play with
Kimberly-Clark that may add credence to our bullish stance on
the company. The first issue is the fact that the Federal
Reserve has, and will continue, to aggressively cut interest
rates. Firms such as Kimberly-Clark greatly benefit from lower
lending rates and increased liquidity. The second issue that
is favoring Kimberly-Clark is the stabilization in energy prices,
which account for a large portion of the company's costs. Although
prices still remain high relative to historical norms, they have
pulled back substantially, which will almost immediately impact
the bottom-line growth of Kimberly-Clark.
Shares of Kimberly-Clark represent a good long-term investment
because of the company's stable and predictable earnings growth.
As such, an investment in the company may be considered more
conservative than one in other sectors such as technology, telecom
or biotechnology, for example.
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Fleet National Bank
P.O. Box 43013
Providence, RI 02940-3010
Industry Group: Paper&Products 52-week high=$73.25
Annual Dividend Per Share=$1.12 52-week low =$49.94
Last earnings 01/18 est=0.87 actual=0.87
Next earnings 04-15 est=0.85 versus=0.80
P/E = 20
Strong Buy = 5
Moderate Buy = 5
Hold = 1
Moderate Sell = 0
Strong Sell = 0