Are Recent Price Swings Creating an Opportunity in Kimberly-Clark Stock?

• Ever wondered if Kimberly-Clark is a hidden value play, or if there is more to the story behind its recent price swings? You are not alone in sizing up whether the stock is a bargain right now.
• The share price has tumbled sharply, losing 14.3% over the last week and 23.4% year-to-date. This has made investors reconsider both its growth prospects and risk perception.
• Recent headlines have focused on shifting consumer trends and supply chain concerns, both of which have contributed to some dramatic short-term moves in the stock. Investors are keeping a close eye on how the company adapts to these forces and whether it can regain market confidence.
• Despite all the noise, Kimberly-Clark currently scores a 6 out of 6 on our valuation checklist, meaning it is considered undervalued from every angle we look at. We will break down exactly how we reach this score with the usual valuation approaches. Be sure to stick around for an even more insightful perspective at the end of the article.

Find out why Kimberly-Clark's -21.1% return over the last year is lagging behind its peers.

Approach 1: Kimberly-Clark Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model works by forecasting Kimberly-Clark's future cash flows and then discounting them back to today to estimate what those future earnings are worth right now. This approach helps provide an intrinsic value for the stock based on its actual ability to generate cash.

Currently, Kimberly-Clark generates free cash flow of $1.79 billion. Analyst estimates look out about five years, projecting steady growth. By 2027, free cash flow is forecasted to climb to $2.32 billion. Extending the view out a full 10 years with further extrapolation, cash flows are expected to continue growing, albeit at a slightly slower pace, reaching approximately $3.18 billion by 2035. All of these values are presented in USD.

When we crunch the numbers using a 2 Stage Free Cash Flow to Equity model, the result is an estimated intrinsic value of $195.33 per share. The current market price is trading at a nearly 49% discount to this valuation, so the DCF suggests Kimberly-Clark is significantly undervalued based on its future cash-generating potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kimberly-Clark is undervalued by 48.8%. Track this in your watchlist or portfolio, or discover 836 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Kimberly-Clark.

Approach 2: Kimberly-Clark Price vs Earnings

For profitable companies like Kimberly-Clark, the Price-to-Earnings (PE) ratio is a reliable way to measure valuation. It tells us how much investors are paying for each dollar of the company’s earnings, which helps judge whether the stock is expensive or cheap compared to its profits.

A "normal" or "fair" PE ratio is influenced by factors such as the company’s growth prospects and how risky its earnings are. Companies with stronger growth and more reliable profits generally deserve a higher PE ratio, while slower growth or higher risk usually means a lower multiple is fair.

Right now, Kimberly-Clark trades at a PE ratio of 16.85x. For perspective, the average PE ratio for its Household Products industry peers is slightly higher at 17.94x, while the broader peer group averages 20.45x. This suggests Kimberly-Clark is trading at a discount, but context matters beyond direct comparisons.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio blends several factors unique to Kimberly-Clark, including its earnings growth outlook, industry context, profit margins, market cap, and risk profile, to calculate what a justifiable PE ratio should be. For Kimberly-Clark, the Fair Ratio is 22.21x, which is notably above both its current PE and the industry average.

The Fair Ratio is a more nuanced benchmark than just comparing similar companies because it adjusts for the qualities that make Kimberly-Clark unique. In this case, with the actual PE ratio (16.85x) well below the Fair Ratio (22.21x), the stock looks undervalued based on its earnings potential, growth, and risk profile combined.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1402 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Kimberly-Clark Narrative

Earlier we mentioned there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story or perspective about a company that connects the business’s future—how you think revenue, profit margins, and growth will play out—to an actual financial forecast and a fair value estimate.

Instead of just looking at numbers, Narratives help you make investment decisions by linking what you believe about Kimberly-Clark’s future to what that means for its share price today. On Simply Wall St, Narratives are a feature on the Community page, used by millions of investors, that turns your view into a clear, actionable valuation. This makes it easy for anyone to compare fair value to the market price and see if the stock looks like a buy or a sell.

Narratives stay up-to-date as news breaks or fresh results come out, so your valuation story can evolve and always reflect the latest information. No manual recalculations are needed. For example, one investor’s Narrative for Kimberly-Clark might be bullish, expecting revenues to reach $17.6 billion, profit margins to improve, and targeting a price as high as $162. Another may have a more cautious view, anticipating softer demand and citing a downside price of $118. Whether you’re optimistic or skeptical, Narratives let you make smarter, more informed decisions, grounded in your perspective and clarified by real numbers.

Do you think there's more to the story for Kimberly-Clark? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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