Could Cash Machine Kimberly-Clark Stock Be Your Next Buy?
Kimberly-Clark (KMB) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
KMB Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 5.0%, but Kimberly-Clark stock does
- Strong Margin: Last 12 month operating margin of 14.4%
- Growth: Last 12 revenue growth of -2.2% – revenue decline, but this selection is all about high yield and margin
- Valuation: KMB stock is currently trading at 30% below its 2Y high, 10% below its 1M high, and at a PS lower than the 3Y average.
Below is a quick comparison of KMB fundamentals with S&P medians.
| KMB | S&P Median | |
|---|---|---|
| Sector | Consumer Staples | – |
| Industry | Household Products | – |
| Free Cash Flow Yield | 5.0% | 4.3% |
| Revenue Growth LTM | -2.2% | 6.6% |
| Revenue Growth 3Y AVG | -4.8% | 5.5% |
| Operating Margin LTM | 14.4% | 18.7% |
| Operating Margin 3Y AVG | 15.4% | 18.2% |
| PE Ratio | 16.2 | 24.0 |
*LTM: Last Twelve Months
But What Is The Risk Involved?
While KMB stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. KMB took a hit of about 33% in the Dot-Com crash, and it was even worse during the Global Financial Crisis with a 35% drop. The 2018 correction and Covid pullback weren’t as brutal but still pushed it down around 24% each. The inflation shock trimmed roughly 22% off the stock. So, even with solid fundamentals, KMB hasn’t been immune to big swings when the market turns sour. Risk is real, no matter the backdrop.
For more details and our view, see Buy or Sell KMB Stock.
Stocks Like KMB
Not ready to act on KMB? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few years average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed as follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4%, respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
Portfolios Beat Stock Picking
Individual stocks can soar or tank, but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside, and mitigate the downside associated with any individual stock.
Beating the market consistently is hard, but the Trefis High Quality (HQ) Portfolio makes it look achievable. By selecting 30 high-conviction stocks, the HQ strategy has historically outpaced the S&P 500, S&P Mid-Cap, and Russell 2000. See how this curated selection delivers superior risk-adjusted returns in our detailed performance factsheet.