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Is Kimberly-Clark Stock Heading for a Decline?

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Unattractive valuation 

Kimberly-Clark (KMB) stock has increased 8.1% so far this year and trades at a forward PE multiple of 18.7x, which seems unappealing, as its bottom line is projected to decline in the coming quarters. Currency volatility, cost headwinds, and an increase in the tax rate are likely to drag Kimberly-Clark’s earnings lower.

In comparison, Procter & Gamble (PG), Colgate-Palmolive (CL), Clorox (CLX), and Church & Dwight (CHD) are also trading at a higher valuation multiple. Low growth expectation and high valuation could limit the upside.

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Analysts see downside  

Most of the analysts recommend a “hold” on KMB stock as soft sales, a decline in earnings, and high valuation is likely to restrict the upside of the stock. Of the 18 analysts covering the stock, 13 suggest a “hold,” four analysts recommend a “sell,” and one analyst has a “buy” recommendation.

Analysts have a target price of $109.94 per share on Kimberly-Clark stock, which implies a downside of 10.7% based on its closing price of $123.18 on April 12.

Analysts continue to recommend a “hold” on the stocks of other major household and personal care product manufacturers including Procter & Gamble, Clorox, Church & Dwight, and Colgate-Palmolive. Currency volatility, input cost headwinds, and a higher tax rate are expected to limit the sales and earnings growth rate.

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