Kimberly-Clark A Tower Of Stability

By Ryan C. Fuhrmann | April 24, 2012 AAA

Consumer products giant Kimberly-Clark (NYSE:KMB) reported impressive profit growth during its first quarter. The growth was above what the company will report over the coming few years, but the fundamentals of its global operations remain sound, as does the steady and ample dividend payment.

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First Quarter Recap
Net sales advanced 4% to $5.2 billion. Organic sales increased 6%, led by 13% growth internationally. The personal care unit, which includes Huggies that competes with Procter & Gamble's (NYSE:PG) Pampers brand, reported sales growth of 8.2% to $2.4 billion, or approximately 46% of the total top line. Consumer tissue, such as Kleenex, is the next largest segment and saw sales fall a modest 0.9% to account for nearly a third of total sales. The professional and health care segments reported growth around 4%.

Consolidated operating profits jumped nearly 29% and stemmed from lower product costs and other cost efficiencies. Every unit reported positive profit growth but consumer tissue was the standout with a gain of almost 45% to $217 million. Professional reported a 20% increase while personal care posted respectable gains of close to 3%. A comparatively modest tax expense increase resulted in net income growth of 33.7% and total earnings of $468 million, or $1.18 per diluted share.

SEE: Understanding The Income Statement

Outlook and Valuation
Analysts currently project flattish full year sales, with growth of less than 1% and total sales of nearly $21 billion. The consensus earnings projection currently stands at $5.10 per share. At a current share price around $76.50, this places the forward P/E right at 14.

The Bottom Line
Kimberly-Clark's earnings multiple isn't overly compelling and is right about at the market average and its average range over the past five years. However, the dividend yield of 3.90% will likely appeal to income-minded investors, as will its sales stability and global diversification. For the most part, the same can be said for the peer group that includes P&G, Colgate-Palmolive (NYSE:CL), Clorox (NYSE:CLX), and Unilever (NYSE:UN) (NYSE:UL).

SEE: 5 Must-Have Metrics For Value Investors

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At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

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