Kimberly-Clark (KMB) — Deep Dive Research #

Date: 2026-03-27 Price at time of research: $98.85 Context: Graham defensive value candidate evaluation; Reddit claim of "lowest since 2014"

1. Price & Market Data #

"Lowest since 2014" claim: PARTIALLY TRUE, OVERSTATED.

• Annual low 2025: $96.83. Annual low 2026 (YTD): $95.09.
• Annual low 2022 was $95.08 — so the current price is near, but not below, 2022 levels.
• Annual low 2024 was $107.72; 2023 was $105.46.
• The claim is roughly accurate in spirit — KMB is trading at multi-year lows approaching 2022 trough territory. It is NOT at a price last seen in 2014 ($65.09 annual low). The claim would be more accurate stated as "near 3-4 year lows."

2. Valuation Multiples #

EPS Note (important): yfinance trailingEps shows $4.86 — this is a GAAP subset (continuing operations only subset). The proper TTM EPS measures are:

• Adjusted (company reported): $7.53 (Q4 $1.86 + Q3 $1.82 + Q2 $1.92 + Q1 $1.93) → P/E = 13.1x
• GAAP Diluted (income statement): $6.07 → P/E = 16.3x
• Forward (consensus): $7.71 → P/E = 12.8x
• The $4.86 figure appears to be GAAP EPS excluding discontinued operations in a specific way — not representative.

The forward and adjusted P/Es of ~13x are reasonable for a defensive consumer staples company.

3. Dividend #

10-Year Dividend Growth History: | Year | Annual Div | YoY Growth | |------|-----------|-----------| | 2015 | $3.52 | +8.1% | | 2016 | $3.68 | +4.5% | | 2017 | $3.88 | +5.4% | | 2018 | $4.00 | +3.1% | | 2019 | $4.12 | +3.0% | | 2020 | $4.28 | +3.9% | | 2021 | $4.56 | +6.5% | | 2022 | $4.64 | +1.8% | | 2023 | $4.72 | +1.7% | | 2024 | $4.88 | +3.4% | | 2025 | $5.04 | +3.3% |

Average 10-year DGR: ~3.9%/yr. Growth has decelerated from 5-8% range (2013-2018) to ~2-3% (2022-2025).

KMB is a Dividend King (50+ consecutive years of increases). The payout ratio appearing >100% vs the $4.86 yfinance EPS is a data artifact — real payout ratio vs adjusted EPS is ~68%.

4. Income Statement — 3 Years #

Trend: Revenue declining (-1.3% in FY2025, -2.0% in FY2024, -2.0% in FY2023). This is a structural headwind: volume decline + divestiture of KC Professional / tissue segments. The company divested its tissue and professional businesses in 2024 ("KC One" restructuring), which explains the revenue decline. This is by design, not organic deterioration.

Margins contracted in FY2025 vs FY2024 peak. The 2023 EBITDA margin of 15.5% was depressed by input cost inflation (pulp, polyethylene).

5. Free Cash Flow #

FY2025 FCF declined sharply due to elevated CapEx ($1.14B vs normalized $0.72B). The CapEx increase is tied to the K-C One restructuring program. Normalized FCF power is likely ~$2.2-2.5B based on prior years.

FCF Yield: $1.64B / $32.8B market cap = 5.0% (reported) or ~6.7-7.6% (normalized).

6. Balance Sheet #

Balance Sheet Context: This is a known characteristic of mature consumer staples with decades of leveraged buybacks and negative retained equity. The D/E ratio of 465x is an artifact of cumulative buybacks having reduced book equity to near-zero — not indicative of financial distress. Net Debt/EBITDA of 2.1x is manageable for investment-grade consumer staples. KMB is rated A- (S&P).

The current ratio of 0.74x fails Graham's filter (requires ≥2.0). This is common for large US consumer staples (PG, CL, KMB all have sub-1 current ratios due to efficient working capital management and committed credit facilities).

7. Insider Activity (Last 6 Months) #

Summary (Last 6 months):

• Purchases: 42,920 shares (6 transactions) — dominated by one director open-market purchase
• Sales: 3,049 shares (1 transaction)
• Net: +39,871 shares net purchased

Signal: The director Samuel Todd Maclin spent $1.04M of his own money on 10,000 shares at ~$104.15 (Feb 9). This is a genuine open-market purchase by an independent director — a positive signal per shr-002. The officer dispositions are mostly tax withholding events (vesting), not discretionary sales. The CTO sale in August was at $133.40 (well above current price). Overall insider signal: mildly bullish.

8. Analyst Ratings #

Recent PT Change: Piper Sandler cut PT from $133 to $114 on March 18, 2026.

Consensus is a cautious Hold with ~16% upside to mean PT. No strong sell conviction despite the stock being down 29% over 12 months.

9. Short Interest #

Short interest is building (+4.8% MoM) and at 13.1% is moderately elevated for a large-cap consumer staples company. 8.3 days to cover is significant. Shorts appear to be adding conviction bets against the stock — likely based on revenue decline trend and restructuring uncertainty, not a squeeze setup.

10. Recent News (Last 30 Days) #

Themes: Valuation debate at current lows, dividend yield attractiveness, analyst PT cuts, product innovation narrative (CEO's K-C One transformation), ethics recognition. No major negative catalyst in the last 30 days — the PT cut appears to be a response to Q4 results and guidance.

11. 6-Month Price History (Weekly) #

The November 2025 drop (~14% in a week) was likely triggered by Q3 earnings / guidance. There was a brief recovery to $110 in Feb-Mar 2026, which has since reversed. The stock is testing the $96-99 support zone again.

12. Quarterly Earnings History #

All 4 quarters beat estimates. The Q2 beat (+16%) was substantial. Full-year adjusted EPS sum: $7.53. Consensus FY2026 EPS: $7.71 (+2.4% growth). The market is NOT pricing in EPS growth as the driver — the P/E contraction appears driven by revenue decline and restructuring uncertainty.

Graham Analysis Summary #

7 Defensive Filters #

*Current ratio failure is common for mature US consumer staples (shr-015 analog: financial structure artifact of buybacks, not distress). †P/B failure: KMB has near-zero equity due to ~30 years of buybacks. Not a solvency signal. The combined P/E × P/B = 285x wildly fails, but this metric breaks down for companies with minimal book equity.

Score: 3/7 Graham filters (passing: size, earnings stability, dividend record; borderline on P/E). This is a Growth Stock Addendum / yield-play analysis rather than pure Graham defensive.

Graham Intrinsic Value (AAA yield proxy 4.5%) #

Break-even growth rate (where V = $98.85): ~2.7% on adjusted EPS basis, ~4.5% on GAAP basis.

If you believe KMB can sustain 3-5% EPS growth (roughly matching or slightly exceeding its dividend growth rate of ~3.5%), then intrinsic value is $107-136 on adjusted EPS, implying modest to moderate margin of safety at current price.

Red Flags for Graham Candidate Assessment #

Key Thesis Questions #

1. Is the revenue decline structural or transitional? KMB divested tissue/professional segments (KC One restructuring). Revenue decline is partly by design. Remaining business (personal care: diapers, hygiene) has better margin profiles. If restructuring completes in 2025-2026, the remaining segments may show organic growth.

2. Can EPS grow 3-5% needed to support current valuation? FY2026 consensus is only +2.4%. At $7.71 forward EPS × 13x P/E = $100 — barely above current price. The stock needs either multiple expansion (market recognizes restructuring value) or better-than-expected EPS growth.

3. Is the 5.18% yield sustainable? Real payout ratio vs adjusted EPS ~68% — sustainable. Vs GAAP EPS from continuing operations may be tighter. The 52-year streak creates strong management commitment to maintaining / growing the dividend.

4. Is the short interest thesis correct? Shorts are adding (13.1%, +4.8% MoM, 8.3 DTC). This is informed bearish conviction (shr-023 applies), not a squeeze setup. Shorts are likely betting on continued revenue decline and restructuring cost overruns.

Data Sources #

• yfinance (KMB), 2026-03-27
• Quarterly earnings actuals from yfinance earnings_history
• Annual income statement, cash flow, balance sheet: yfinance financials
• Price history: yfinance history (period="max")