What’s Behind Kimberly-Clark Stock’s Poor Returns Since 2018?

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Market
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KMB: Kimberly-Clark logo
KMB
Kimberly-Clark

Kimberly-Clark Corp (NYSE: KMB) stock price rose only 20% from $114 in 2018 end to around $137 currently, primarily due to favorable changes in its P/S multiple. During this period, the company did witness a slight rise in revenues, and a drop in the outstanding share count helped the company’s revenue per share. However, over the same period, the S&P 500 has returned around 65%, meaning that KMB stock underperformed the broader markets.

In our interactive dashboard, Why Kimberly-Clark Stock Moved: KMB Stock Has Gained 20% Since 2018, we break down the factors behind this move.

(A) KMB’s Total Revenue has grown 7% from $18.5 billion in 2018 to around $19.8 billion on an LTM basis

  • KMB’s total revenue has risen gradually from $18.5 billion in 2018 to $19.4 billion in FY 2021, and further to $19.8 billion on an LTM basis.
  • Kimberly-Clark produces mostly paper-based consumer products, manufacturing sanitary paper products and surgical & medical instruments.
  • The Personal Care segment makes up around 53% of the company’s sales as of FY ’21, bringing in $10.3 billion for the company.
  • For additional details about KMB revenues and comparison to peers, see Kimberly-Clark (KMB) Revenue Comparison
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(B) Revenue per share (RPS) increased 10% from $53.10 in 2018 to $58.66 currently

  • KMB revenue rose from $18.5 billion in 2018 to $19.8 billion currently, while the outstanding share count decreased from 348.1 million in 2018 to almost 337 million currently.
  • Due to this, RPS has risen from $53.10 in FY ’18 to $58.66 currently.

(C) Price-To-Sales (P/S) multiple for Kimberly-Clark rose strongly from 2x in 2018 to 2.4x by 2021 end but has pulled back to 2.3x currently, still slightly higher than its 2018 level

  • Despite Kimberly-Clark’s slow sales growth between 2018-end to 2021, its P/S multiple rose from 2x in 2018 to 2.4x in late-2021, on the back of rising investor expectations surrounding sanitary and hygiene products.
  • However, due to current geopolitical tensions and increased uncertainty in the broader markets, the P/S multiple has pulled back, currently standing at around 2.3x.
  • For additional details about the company EBITDA and comparison to peers, see Kimberly-Clark (KMB) EBITDA Comparison.

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 Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 KMB Return -2% -4% 20%
 S&P 500 Return -1% -14% 82%
 Trefis Multi-Strategy Portfolio 0% -17% 227%

[1] Month-to-date and year-to-date as of 5/6/2022
[2] Cumulative total returns since the end of 2016

 

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