Stock Analysis on Net
Stock Analysis on Net

Kimberly-Clark Corp. (NYSE:KMB)

This company has been moved to the archive! The financial data has not been updated since April 23, 2021.

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Kimberly-Clark Corp., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 9.30%
01 FCFE0 2,973
1 FCFE1 7,335 = 2,973 × (1 + 146.71%) 6,711
2 FCFE2 15,451 = 7,335 × (1 + 110.65%) 12,934
3 FCFE3 26,975 = 15,451 × (1 + 74.59%) 20,660
4 FCFE4 37,368 = 26,975 × (1 + 38.53%) 26,185
5 FCFE5 38,289 = 37,368 × (1 + 2.46%) 24,548
5 Terminal value (TV5) 574,119 = 38,289 × (1 + 2.46%) ÷ (9.30% – 2.46%) 368,076
Intrinsic value of Kimberly-Clark Corp. common stock 459,113
 
Intrinsic value of Kimberly-Clark Corp. common stock (per share) $1,360.61
Current share price $132.11

Based on: 10-K (reporting date: 2020-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.79%
Expected rate of return on market portfolio2 E(RM) 13.48%
Systematic risk of Kimberly-Clark Corp. common stock βKMB 0.52
 
Required rate of return on Kimberly-Clark Corp. common stock3 rKMB 9.30%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rKMB = RF + βKMB [E(RM) – RF]
= 4.79% + 0.52 [13.48% – 4.79%]
= 9.30%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Kimberly-Clark Corp., PRAT model

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Average Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Dividends declared 1,458 1,415 1,391 1,371 1,322
Net income attributable to Kimberly-Clark Corporation 2,352 2,157 1,410 2,278 2,166
Net sales 19,140 18,450 18,486 18,259 18,202
Total assets 17,523 15,283 14,518 15,151 14,602
Total Kimberly-Clark Corporation stockholders’ equity 626 (33) (287) 629 (102)
Financial Ratios
Retention rate1 0.38 0.34 0.01 0.40 0.39
Profit margin2 12.29% 11.69% 7.63% 12.48% 11.90%
Asset turnover3 1.09 1.21 1.27 1.21 1.25
Financial leverage4 27.99 — — 24.09 —
Averages
Retention rate 0.38
Profit margin 12.09%
Asset turnover 1.23
Financial leverage 26.04
 
FCFE growth rate (g)5 146.71%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Retention rate = (Net income attributable to Kimberly-Clark Corporation – Dividends declared) ÷ Net income attributable to Kimberly-Clark Corporation
= (2,352 – 1,458) ÷ 2,352
= 0.38

2 Profit margin = 100 × Net income attributable to Kimberly-Clark Corporation ÷ Net sales
= 100 × 2,352 ÷ 19,140
= 12.29%

3 Asset turnover = Net sales ÷ Total assets
= 19,140 ÷ 17,523
= 1.09

4 Financial leverage = Total assets ÷ Total Kimberly-Clark Corporation stockholders’ equity
= 17,523 ÷ 626
= 27.99

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.38 × 12.09% × 1.23 × 26.04
= 146.71%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (44,578 × 9.30% – 2,973) ÷ (44,578 + 2,973)
= 2.46%

where:
Equity market value0 = current market value of Kimberly-Clark Corp. common stock (US$ in millions)
FCFE0 = the last year Kimberly-Clark Corp. free cash flow to equity (US$ in millions)
r = required rate of return on Kimberly-Clark Corp. common stock

FCFE growth rate (g) forecast

Kimberly-Clark Corp., H-model

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Year Value gt
1 g1 146.71%
2 g2 110.65%
3 g3 74.59%
4 g4 38.53%
5 and thereafter g5 2.46%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 146.71% + (2.46% – 146.71%) × (2 – 1) ÷ (5 – 1)
= 110.65%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 146.71% + (2.46% – 146.71%) × (3 – 1) ÷ (5 – 1)
= 74.59%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 146.71% + (2.46% – 146.71%) × (4 – 1) ÷ (5 – 1)
= 38.53%