Kimberly-Clark Corp. (NYSE:KMB)

The Price to Sales (P/S) ratio for Kimberly-Clark Corp. exhibited significant fluctuations between 2006 and 2021, characterized by an overall expansion in valuation multiples despite a period of sharp contraction during the 2009 fiscal year. The ratio evolved from 1.72 in 2006 to 2.34 in 2021, indicating that the market's valuation of each dollar of sales increased over the long term.

Valuation Contraction and Recovery (2006–2012)

The P/S ratio experienced a notable decline starting in 2008, reaching a period low of 1.00 in February 2009. This contraction was primarily driven by a significant decrease in share price, which fell to 47.11 US$, while sales per share continued to rise to 46.92 US$. Following this trough, a steady recovery period was observed, with the ratio gradually climbing back to 1.38 by 2012.

Expansion Phase (2013–2017)

A sustained upward trend in the P/S ratio occurred between 2013 and 2017. During this interval, the ratio increased from 1.74 to a peak of 2.45 in 2016. This expansion was fueled by aggressive share price appreciation, which rose from 94.50 US$ in 2013 to 126.42 US$ in 2016, whereas sales per share remained relatively stagnant, fluctuating between 51.09 US$ and 55.75 US$.

Recent Volatility and Peak Valuation (2018–2021)

After a brief correction in 2018 and 2019 where the ratio stabilized around 2.11, a sharp increase occurred in 2020, resulting in a series high P/S ratio of 2.68. This peak coincided with the highest recorded share price of 144.74 US$. By 2021, the ratio moderated to 2.34, reflecting a slight decrease in share price to 132.09 US$ alongside a marginal increase in sales per share to 56.57 US$.

Relationship Between Price and Sales Growth

An analysis of the underlying components reveals that while sales per share grew consistently from 34.51 US$ in 2006 to 56.57 US$ in 2021, the share price grew at a more accelerated pace over the same period. The divergence between linear sales growth and exponential price growth is the primary driver of the expanded P/S multiple observed in the latter half of the analyzed timeframe.