Kimberly-Clark (KMB): Net Margin Drops to 10%, Challenging Bullish Profitability Narratives
Kimberly-Clark (KMB) reported an average annual earnings growth of 1.5% over the past five years, with the net profit margin sliding to 10% from 13.1% in the prior year. The company’s stock trades below its estimated fair value at $119.71 compared to $135.68. Its Price-To-Earnings ratio of 20.2x is below peer averages but above the broader industry. Looking ahead, analysts expect earnings to climb at a moderate 9.3% per year, even as revenue is projected to decline by 3.3% annually. This leaves investors to weigh the quality of earnings against headwinds in sales growth and shrinking margins.
See our full analysis for Kimberly-Clark.
With the core numbers established, it is useful to compare them against prevailing narratives. Some market views may be reinforced, while others could be subject to debate.
See what the community is saying about Kimberly-Clark
-
Analysts forecast profit margins to rise from 12.4% to 13.5% in three years, even as revenue is projected to decrease by 3.3% annually over the same period.
-
According to the analysts’ consensus view, disciplined cost management and ongoing productivity initiatives are expected to drive this improvement in profitability.
-
Consensus narrative notes targeted SG&A savings and automation are anticipated to offset declining sales.
-
Volume growth is likely to face pressure from weaker global consumer demand, but premium product innovation and marketing investment are seen as supporting gross margin gains.
-
-
With both revenue and margins moving in different directions, the consensus narrative sees Kimberly-Clark relying on operational efficiencies to protect earnings quality.
See how analysts think margin recovery will shape the next chapter with the full Consensus Narrative. 📊 Read the full Kimberly-Clark Consensus Narrative.
-
The Price-To-Earnings ratio of 20.2x is below the peer group average of 24x, yet exceeds the global household products industry average of 17.6x. This reflects the company’s strong brand despite rising competition.
-
Analysts’ consensus view highlights Kimberly-Clark’s ability to sustain pricing power and defend share through innovation and brand investment.
-
Strategic focus on premium and differentiated hygiene products is seen as critical for margin expansion, even as heightened competition and portfolio concentration could weigh on long-term competitiveness.
-
Continued innovation is essential. Any slowdown in R&D that limits product differentiation could impact ability to command price and grow share in core categories.
-
-
Kimberly-Clark’s share price of $119.71 currently sits 12.7% below the analyst price target of $137.22, and even further beneath the DCF fair value of $135.68. This positions the stock at a discount in the eyes of many analysts.
-
Analysts’ consensus narrative frames this valuation gap as an opportunity supported by high earnings quality and reasonable downside risk.
-
Analysts agree on steady future earnings and project the company to trade at a higher 23.7x PE in 2028, a premium versus today and compared to the US industry average of 20.8x, assuming margin and cost targets are met.
-
The company’s status as a “good value” rests on investors’ willingness to believe in both margin turnaround and sustained brand strength amid tough market conditions.
-
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Kimberly-Clark on Simply Wall St. Add the company to your watchlist or portfolio so you’ll be alerted when the story evolves.
Have a different take on the figures? Craft your perspective and share your insights in just a few minutes. Do it your way
A great starting point for your Kimberly-Clark research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
Kimberly-Clark faces shrinking revenue, tight competition, and relies heavily on cost controls to defend margins. This raises questions about the reliability of future growth.
If consistent expansion matters most to you, focus on companies delivering steady gains in both revenue and earnings with our stable growth stocks screener (2103 results).
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.
Companies discussed in this article include KMB.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com