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A Look At The Intrinsic Value Of Kimberly-Clark Corporation (NYSE:KMB)

Does the share price for Kimberly-Clark Corporation (NYSE:KMB) reflect it’s really worth? Today, I will calculate the stock’s intrinsic value using the discounted cash flow (DCF) method. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. If you are reading this after March 2018 then I highly recommend you check out the latest calculation for Kimberly-Clark here.

What’s the value?

I use what is known as the 2-stage model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second ‘steady growth’ period. To start off, I pulled together the analyst consensus forecast of KMB’s levered free cash flow (FCF) over the next five years and discounted these values at the cost of equity of 8.49%. This resulted in a present value of 5-year cash flow of US$9.53B. Keen to know how I arrived at this number? Take a look at our detailed analysis here.

NYSE:KMB Future Profit Mar 27th 18
NYSE:KMB Future Profit Mar 27th 18

The infographic above illustrates how KMB’s earnings are expected to move in the future, which should give you an idea of KMB’s outlook. Then, I determine the terminal value, which accounts for all the future cash flows after the five years. I’ve decided to use the 10-year government bond rate of 2.8% as the perpetual growth rate, which is rightly below GDP growth, but more towards the conservative side. Discounting the terminal value back five years gives us a present value of US$35.04B.

The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is US$44.57B. In the final step we divide the equity value by the number of shares outstanding. This results in an intrinsic value of $127.32, which, compared to the current share price of $105.56, we see that Kimberly-Clark is about right, perhaps slightly undervalued at a 17.09% discount to what it is available for right now.

Next Steps:

Although the valuation of a company is important, it shouldn’t be the only metric you look at when researching a company.

For KMB, I’ve compiled three important factors you should further research:

  1. Financial Health: Does KMB have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Future Earnings: How does KMB’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.

  3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of KMB? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!

PS. The Simply Wall St app conducts a discounted cash flow for every stock on the NYSE every 6 hours. If you want to find the calculation for other stocks just search here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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