Tuesday, July 1, 2014

Kimberly Clark (KMB) 2014 Review

Kimberly Clark develops, manufactures and markets personal care products (Huggies, Pull Ups, Little Swimmers, Goodnights, Kotex, Depends, Kleenex, Scott, Cottonelle tissue, Viva paper towels, workplace health products [soaps, sanitizers, etc.] and healthcare products). KMB has grown its profits and dividends at a 4-10% annual rate over the past 10 years earning an amazing 30%+ rate of return on equity.  As with many of our companies, Kimberly has had a rough go of it in 2008-2011 as customers ‘traded down’ to generic brands.  However, the company has seen improvement in its bottom line which should continue as a result of:

(1) significant cost cutting as well as better supply chain management,

(2) expansion into emerging markets,

(3) new product innovation,

(4) a significant stock buyback program.

Negatives:

(1) volatile commodity prices,

(2) macro-economic uncertainty.

KMB is rated A++ by Value Line, carries a 53% debt to equity ratio and its stock yields 3.0%

  Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                 Yield      Growth Rate     Ratio       Since 2004

KMB          3.0%          4%                58%             10
Ind Ave       2.3            10                 49                NA 

                Debt/                        EPS Down       Net        Value Line
                Equity         ROE      Since 2004      Margin       Rating

KMB         53%           42%            3                 10             A++
Ind Ave     48               16             NA                8            NA

     Chart

            Note: KMB stock made great progress off its March 2009 low, quickly surpassing the downtrend of its June 2007 high (straight red line) and the November 2008 trading high (green line).  Long term it is in an uptrend (blue lines).  Intermediate term, it is in an uptrend (purple lines).  The wiggly red line is the 50 day moving average.  The High Yield Portfolio owns a 50% in KMB, having Sold Half of its holding at around $85 per share in early 2013.  The upper boundary of its Buy Value Range is $54; the lower boundary of its Sell Half Range is $93.


   

7/14

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