Kimberly-Clark: An Interesting Dividend Growth Play, But At A High Premium

Core Viewpoint - Kimberly-Clark is a well-established company with valuable brands, but it faces challenges such as high trading multiples, inflation risks, and competitive pressures in both domestic and international markets [3][4][19]. Financial Overview - Cash and Equivalents: $853 million [2] - Total Current Assets: $5.6 billion [2] - Total Assets: $17.1 billion [2] - Total Current Liabilities: $6.9 billion [2] - Long-Term Debt: $7.1 billion with an average interest rate of 3.3% [2] - Total Shareholder Equity: $1.18 billion [2] - Price/Book Ratio: Over 40, indicating a high premium to book value [2] - P/E Ratio: Currently at 27.08, with a forward P/E ratio of 19.8 projected for 2026 [4] Sales and Earnings Performance - Net Sales: $19.4 billion in 2021, $20.2 billion in 2022, $20.4 billion in 2023, and projected $20.4 billion for Q1 2024 [4] - Gross Profit: $6.0 billion in 2021, $6.2 billion in 2022, $7.0 billion in 2023, and $1.9 billion for Q1 2024 [4] - Net Income: $1.84 billion in 2021, $1.96 billion in 2022, $1.76 billion in 2023, and $658 million for Q1 2024 [4] - Diluted EPS: $5.35 in 2021, $5.72 in 2022, $5.21 in 2023, and $1.91 for Q1 2024 [4] Dividend and Shareholder Returns - Current Dividend Yield: 3.4%, with a history of annual increases [5] - Stock Repurchase Program: 1,051,055 shares bought back in Q4 2023 at around $120 per share, and 458,828 shares in Q1 2024 at $120-$125 per share [5] Market Position and Competition - Kimberly-Clark operates in a highly competitive market with significant cost sensitivity among its products [3] - The company faces challenges in the Russian market due to geopolitical tensions, impacting its operations [3][14] Brand Value and Consumer Trust - The company has a strong portfolio of recognizable brands such as Huggies, Kotex, Depend, Cottonelle, Kleenex, and Scott, which contribute to consumer trust and loyalty [14]