Steady Revenue Growth Has Not Been Reflected In Kimberly-Clark’s Stock Price – Here’s Why

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KMB
Kimberly-Clark

Kimberly-Clark Corp (NYSE: KMB) stock price has gained just 15% from $114 in late 2018 to $131 currently, primarily due to favorable changes in its P/S multiple and revenues. Additionally, over this period, the company witnessed a rise in its revenue per share, helped by a slight drop in the outstanding share count. However, despite this, the stock has strongly underperformed the S&P, which returned a little under 60% over the same period.

In our interactive dashboard, Why Kimberly-Clark Stock Moved: KMB Stock Has Gained 15% Since 2018, we break down the factors behind this move.

(A) KMB’s Total Revenue has grown 9.1% from $18.5 billion in 2018 to around $20.2 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 $20.2 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 made up around 53% of the company’s sales as of FY ’21, contributing $10.3 billion to total revenue.
  • 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 12% from $53.46 in 2018 to $59.62 currently

  • KMB revenue rose from $18.5 billion in 2018 to $20.2 billion currently, while the outstanding share count decreased from 345.8 million in 2018 to almost 338.4 million currently.
  • Due to this, RPS has risen from $53.46 in FY ’18 to $59.62 currently.

(C) Price-To-Sales (P/S) multiple for Kimberly-Clark rose from 2.1x in 2018 to 2.5x by 2021 end but has pulled back to 2.2x currently, slightly higher than its 2018 level

  • Despite Kimberly-Clark’s slow sales growth between 2018-end to 2021, its P/S multiple rose from 2.1x in 2018 to 2.5x 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 2.2x.
  • For additional details about the company’s stock returns and comparison to peers, see Kimberly-Clark (KMB) Stock Return Comparison.

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 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 KMB Return 5% -8% 15%
 S&P 500 Return 2% -17% 77%
 Trefis Multi-Strategy Portfolio 3% -20% 218%

[1] Month-to-date and year-to-date as of 11/18/2022
[2] Cumulative total returns since the end of 2016

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