Kimberly-Clark Corporation (KMB)

Conclusion

Kimberly-Clark makes personal care and household paper products, including Huggies, Kleenex, Cottonelle and Kotex, sold through retailers and distributors in North America and internationally. At 111.93 USD on 2026-11-09, the market capitalisation is 68.7 billion USD.

The verdict is overvalued. The current P/E of 20.8 is close to its ten-year median of 21.5, but EV/EBITDA of 23.8 compares with a median of 14.2, and P/FCF of 35.3 with a median of 18.7. The DCF gives 41.18 USD per share. The fair value band runs from 42.18 to 63.27 USD with a midpoint of 52.73 USD, giving a margin of safety of -52.9% at the current price. The fair value from historical multiples is 64.27 USD. The reverse DCF implies revenue growth of 13.8% a year, while revenue has shrunk at a five-year CAGR of -2.1% and free cash flow per share at -7.7%.

What supports the case is the return on capital: ROIC of 24.0% against a WACC of 8.5%, with ROIC minus WACC of 15.6%. The Altman Z-score of 5.04 and net debt to EBITDA of 1.31 add balance-sheet comfort. What would break it is the shrinking top line, with revenue down at a three-year CAGR of -5.2%. Trailing free cash flow conversion of 58.9% is well below its five-year level, and current-year earnings estimates have been cut by 8.7% over 90 days.

Financial health

Financial strength is green, held up by net debt to EBITDA of 1.31, interest coverage of 10.6 and an Altman Z-score of 5.04 in the safe zone. The company is a manufacturer, so the Altman model applies. The current ratio of 0.89 and quick ratio of 0.58 are weaker, and debt to equity of 1.91 means the balance sheet is leveraged. Insolvency risk: medium, about 4.9% by the estimate of the Ohlson model over one to two years. The company's debt has declined slightly over five years, with a revenue-relative debt change of -0.7% a year. The debt maturity schedule is not available, so refinancing risk cannot be checked.

Earnings quality

Earnings quality is green. Five-year free cash flow conversion of 104.3% and a Beneish M-score of -2.51, which is read as unlikely manipulation, support the view. The five-year share count change is -0.6% a year, so buybacks have reduced the share count. Trailing free cash flow conversion is weaker at 58.9%. The Piotroski score is 5 of 9. The accrual ratio is -4.5%, which is favourable. Stock-based compensation equals 0.8% of revenue, and free cash flow after it is 1.81 billion USD. The company beat estimates in six of the last eight quarters, with an average surprise of 2.1%. Estimates for the current year have been revised down by 8.7% over 90 days, with 7 downgrades against 4 upgrades in the last 30 days.

Profitability

Profitability is green. The net margin of 19.9% is well above its ten-year median of 11.7%. The gross margin of 36.5% sits above its median of 35.0%. The operating margin of 11.8% is below its median of 15.2%, which is a concern. The return on invested capital of 24.0% against a WACC of 8.5% gives a ROIC minus WACC of 15.6%, which the model classifies as creating value. Return on equity of 107.4% is inflated by leverage: the DuPont split shows a net margin of 11.7%, asset turnover of 1.00 and an equity multiplier of 11.5. The five-year median ROIC is 21.6%.

Growth

Growth is red. Revenue has a compound growth rate of -5.2% over three years, -2.1% over five years and -0.8% over ten years. Revenue grew in six of the last ten years. EPS grew at 2.0% a year over three years and fell at -2.5% over five years, but rose at 8.2% over ten years. Free cash flow per share fell at -3.6% over three years and -7.7% over five years. The next-year EPS estimate implies growth of 5.3%, which would be a reversal from the recent decline.

Valuation

Valuation is red. Against ten-year medians, the P/E of 20.8 sits at a premium of -3.2% to its median of 21.5, while EV/EBITDA of 23.8 carries a premium of 67.3% to its median of 14.2, and P/FCF of 35.3 a premium of 88.6% to its median of 18.7. The DCF gives 41.18 USD per share, using a discount rate of 8.87%, a 2.5% terminal growth rate and no near-term growth. The fair value is an order of magnitude built on fixed assumptions, not a price target. The reverse DCF implies growth of 13.8%, against revenue growth of -2.1% and free cash flow per share growth of -7.7% over five years. The dividend yield is 2.5% and the payout on free cash flow is 86.7%.

Risks

Weak revenue is the central risk. Continued decline would make the 13.8% growth implied by the price harder to reach, and the DCF is sensitive to this. Lower free cash flow conversion would reduce the dividend cover, which already uses 86.7% of free cash flow. The leverage shown by debt to equity of 1.91 and the weak current ratio of 0.89 would limit flexibility if earnings fall further. The operating margin below its median could signal pressure on costs or pricing. Information not available includes the debt maturity schedule and revenue by segment, so the refinancing and segment analyses are incomplete. This analysis rests only on the figures provided and does not cover events after the stated dates.