What is Kimberly-Clark’s Fundamental Value Based on Expected 2018 Results?

by Trefis Team
-3.05%
Downside
111
Market
108
Trefis
KMB
Kimberly-Clark
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Kimberly-Clark‘s (NYSE: KMB) has had a mixed fiscal 2017, as its earnings per share came in ahead of market expectations but revenue missed. The company has struggled to generate meaningful revenue growth of late, due to flat organic sales. However, the company has been able to sustain its EPS growth largely due to its successful cost-saving initiatives. We expect this trend to continue through the end of the current fiscal year as well.

We have summarized our forecasts in an interactive model. You can modify assumptions such as changes in expected segment revenue or EBITDA margins to see how they impact the company’s value. The image below shows one of the key steps in identifying Kimberly-Clark’s valuation sensitivity to changes in its segment revenues. We detail how changes in revenue or segment EBITDA margin impacts total EBITDA, which then impacts enterprise value (assuming a constant EBITDA multiple).

Kimberly-Clark’s stock price has fluctuated between $112 and $131 since the beginning of last year. We have maintained our long-term price estimate for the company at $121. Our price estimate is still around 10% ahead of the current market price, which is driven by forecast performance of the Personal Care segment and the tissues business. Our forecasts for the year are summarized in our dashboards for Kimberly-Clark. If you have a different view, you can modify various inputs to see how updated inputs impact the company’s valuation. You can share the links to scenarios created on our platform.

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