COMPANY DESCRIPTION

Kimberly-Clark manufactures and markets products primarily made from natural or synthetic fibers. Co. has four operating segments: Personal Care, which provides disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other products; Consumer Tissue, which provides facial and bathroom tissue, paper towels, napkins and related products; K-C Professional, which provides products such as apparel, wipers, soaps, sanitizers, tissues and towels; and Health Care, which provides surgical and infection prevention products for the operating room, and a portfolio of medical devices focused on pain management, respiratory and digestive health. Some key Kimberly-Clark's brands are Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend among others.The company's strong portfolio of daily use brands sold across 175 countries is helping it to retain a market leading position. 

 

ECONOMIC MOAT

In our opinion Kimberly Clark’s moat is dug by a branded portfolio of market leading products which include diapers, feminine-care products, and facial tissues.  Huggies, Scott, Kleenex, Cottonelle, and Kotex are all $1 billion brands.  Globally diverse supply chain selling its products in more than 170 countries.

 

OUTLOOK

Kimberly Clark struggled in 2014. Much of the struggles was due to difficulties in Venezuela. Volatile commodity pricing and currency fluctuations will likely continue to pressure operations in the coming months. Product innovation, a stronger advertising and marketing campaign, and geographic diversification will lead to healthy long-term growth. Kimberly-Clark is rewarding its shareholders. The board of directors recently hiked the quarterly dividend 5%, to $0.88 a share. Too, Kimberly plans to repurchase between $800 million and $1 billion of its common stock this year.  KMB’s attractive dividend yield boost its conservative appeal.

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STRENGTHS

  • Portfolio of market-leading, daily-useproducts with strong brandsContinued investments in product innovation and marketing

  • Steady growth in profitability

WEAKNESSES

  • Revenues highly dependent on specific geographies, customers and product segments

  • Unfunded employee pension benefits

THREATS

  • Intense competition

  • Environmental conerns

  • High labor costs

OPPORTUNITIES

  • Growing global medical devices market

  • Increasing preference for organic andnatural personal care products

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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