Monday, August 06, 2012

Kimberly Clark (KMB) 2012 Review


Kimberly Clark develops, manufactures and markets personal care products (Huggies, Pull Ups, Little Swimmers, Goodnights, Kotex, Depends, Kleenex, Scott, Cottonelle tissue and Viva paper towels).

KMB has grown its profits and dividends at a 4-9% 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 the last five years as customers ‘traded down’ to generic brands. However, the company is seeing 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 buy back program,

Negatives:

(1) volatile commodity prices,

(2) currency fluctuations.

KMB is rated A++ by Value Line, carries a 51% debt to equity ratio and its stock yields 4.0%

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
KMB 4.0% 4% 64% 10
IND 2.5 11 40 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
KMB 51% 33% 3 8% A++
IND 36 20 NA 13 NA


Chart

Note: KMB stock made great progress off its March 2009 low, surpassing the downtrend off its June 2007 high (red line) and the November 2008 trading high (green line). Long term, the stock is in an uptrend (straight blue lines). Intermediate term, it is in an uptrend (purple lines). Short term it is in an uptrend (brown line). The High Yield Portfolio owns a 75% position in KMB. The upper boundary of its Buy Value Range is $51. The lower boundary of its Sell Half Range is $87.




http://finance.yahoo.com/q?s=KMB




Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.