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Sunday, 04/01/2001

KMB - Kimberly-Clark

Company Description

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.

DRIP Information:

Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment  = No         Temper Enrollment Serv:  Yes

Min/Max Investment = $25 to $3,000/quarter
Reinvestment Fees: 
Dividend: 0           Cash: 0        Auto ReInvest: N/A

Transfer Agent:

Fleet National Bank
c/o EquiServe
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
Analyst Ratings:
Strong Buy    = 5
Moderate Buy  = 5
Hold          = 1
Moderate Sell = 0
Strong Sell   = 0


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