Kimberly-Clark CorporationKMB

Morningstar Rating

Stock Research and Analysis

by Erin Swanson, CFA

Like other competitors in the household and personal product industry, Kimberly-Clark continues to face numerous headwinds. Consumer spending remains soft. Commodity prices, despite falling from unprecedented highs, remain elevated above long-term averages. Read more

Bulls Say

In domestic markets, Kimberly's strong brands cover a range of price points and facilitate consumer acceptance of new product improvements. In emerging and developing markets, the firm is positioning many of its brands as premium offerings. We think this is a wise move; it's easier to take a brand down later to a value position if it makes strategic sense.

We are impressed by the firm's commitment of returning cash to shareholders. Kimberly has paid a quarterly dividend since 1935. We believe the firm's strong cash flows will continue to support these payments.

Kimberly announced further restructuring actions recently to improve its competitive positioning in this challenging macroeconomic environment, which indicates to us that management acknowledges the head winds that the firm faces (namely soft consumer spending and unfavorable foreign currency rates) and the steps that are needed to better position it for the long term. Read more

Bears Say

The higher prices Kimberly is charging on its products to offset the unprecedented rise in input costs are proving to be a double-edge sword, as cash-strapped consumers trade down to lower-priced private-label alternatives, particularly within child care and consumer tissue lines.

Competitive pressures in the European diaper market could continue to weigh on Kimberly's sales and force the firm to increase its advertising spending to maintain share.

Lagging product innovation in its more mature markets and slower growth in developing and emerging markets could pressure Kimberly's near-term growth.

Strategy

Kimberly is attempting to cut even more costs from its already lean operations, due to the fact that commodity costs still remain elevated above long-term averages, despite falling from unprecedented Read more

Management

Thomas Falk, 51, has served as CEO and chairman since 2002 and 2003, respectively. We believe Falk's 25-year tenure at Kimberly-Clark is a plus for the firm, particularly given the challenging operating environment. That said, we believe the roles of Read more

Profile

Kimberly-Clark is a leading player in the global health and hygiene category selling bathroom tissues, diapers, feminine products, and paper towels. Its brands include Kleenex, Read more

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