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Kimberly-Clark Corporation Stock Buy Recommendation Reiterated (KMB)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Kimberly-Clark Corporation (NYSE:KMB) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Products industry. The net income increased by 19.7% when compared to the same quarter one year prior, going from $432.00 million to $517.00 million.
  • 38.20% is the gross profit margin for KIMBERLY-CLARK CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.90% trails the industry average.
  • Net operating cash flow has increased to $844.00 million or 12.53% when compared to the same quarter last year. Despite an increase in cash flow, KIMBERLY-CLARK CORP's average is still marginally south of the industry average growth rate of 20.85%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Household Products industry and the overall market on the basis of return on equity, KIMBERLY-CLARK CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

Kimberly-Clark Corporation, together with its subsidiaries, engages in manufacturing and marketing health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional and Other, and Health Care. Kimberly-Clark has a market cap of $33.76 billion and is part of the consumer goods sector and consumer non-durables industry. The company has a P/E ratio of 18.2, above the S&P 500 P/E ratio of 17.7. Shares are up 17.3% year to date as of the close of trading on Wednesday.

You can view the full Kimberly-Clark Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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