KMB
KMB
Accumulate 2026-04-26
Model
DCF
Price at Report
$97.85
Base IV
$104.18
Bear IV
$55.28
Bull IV
$184.11
Entry Zone: 53-96 · Sell Above: 156
Bore Family Office
Valuation Report — Kimberly-Clark Corporation (KMB) • April 26, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.29% • Current Price: $97.85
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Kimberly-Clark Corporation is a global consumer staples leader specializing in personal care and tissue products, with iconic brands including Huggies, Kleenex, Cottonelle, and Scott. Following the late-2024 spin-off of its K-C Professional business (now listed as KMB-A), the remaining KMB is a more focused consumer-facing company with two core segments: Personal Care and Consumer Tissue.
The spin-off simplifies KMB's portfolio and concentrates management attention on consumer brands with strong market positions. The company benefits from recession-resistant demand, powerful brand loyalty, and 54 consecutive years of dividend growth — making it a Dividend Champion. However, it faces ongoing margin pressure from input costs (pulp, energy), private-label competition, and demographic headwinds in developed markets.
Post-spin KMB generates roughly $16.4B in revenue with ~19% EBITDA margins and ~10% FCF margins. The company has been actively repurchasing shares, reducing the count from 339M (2021) to 333M (2025). With the professional business separated, management can now allocate capital more aggressively toward organic growth and shareholder returns.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Personal Care | $9,500M | 58% | +3.5% | 22.0% | Huggies, Pull-Ups, Depend, Kotex — category leader |
| Consumer Tissue | $6,947M | 42% | +1.5% | 14.0% | Kleenex, Cottonelle, Scott — mature, competitive |
| Blended Growth Rate | — | 100% | +2.7% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 11.0% | 8–12% adequate |
| FCF Margin | 10.0% | ≥10% strong |
| Debt / EBITDA | 2.1x | 2–4x moderate |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $19,440 | $20,175 | $17,146 | $16,805 | $16,447 |
| Rev YoY Growth | — | +3.8% | -15.0% | -2.0% | -2.1% |
| Gross Margin | 30.8% | 30.8% | 36.6% | 37.4% | 36.0% |
| EBITDA ($M) | $3,327 | $3,435 | $2,681 | $3,481 | $3,156 |
| EBITDA Margin | 17.1% | 17.0% | 15.6% | 20.7% | 19.2% |
| Operating Income ($M) | $2,670 | $2,748 | $1,970 | $2,650 | $2,300 |
| Operating Margin | 13.7% | 13.6% | 11.5% | 15.8% | 14.0% |
| Net Income ($M) | $1,814 | $1,934 | $1,764 | $2,545 | $2,021 |
| Net Margin | 9.3% | 9.6% | 10.3% | 15.1% | 12.3% |
| EPS (diluted) | $5.35 | $5.72 | $5.21 | $7.56 | $6.07 |
| Free Cash Flow ($M) | $1,723 | $1,857 | $2,776 | $2,513 | $1,639 |
| Annual DPS | $4.320 | $4.520 | $4.760 | $4.960 | $5.120 |
| Total Debt ($M) | $7,800 | $7,400 | $7,100 | $6,800 | $6,474 |
💹 Capital Return & Share Count Analysis
Net Share Change
-4.3% (2018→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2018 | 348.0M | — | — | — |
| 2019 | 346.0M | -0.6% | — | — |
| 2020 | 354.0M | +2.3% | — | — |
| 2021 | 339.0M | -4.2% | $1,800 | 5.4% |
| 2022 | 338.0M | -0.3% | $1,650 | 5.0% |
| 2023 | 337.0M | -0.3% | $1,500 | 4.5% |
| 2024 | 337.0M | +0.0% | $1,700 | 5.2% |
| 2025 | 333.0M | -1.2% | $1,200 | 3.7% |
KMB has been systematically reducing shares outstanding, from 348M (2018) to 333M (2025) — a 4.3% cumulative reduction. Buybacks are funded from FCF, not debt issuance (net debt declining). The 2025 buyback was lower ($1.2B) as the company prioritized the K-C Professional spin-off. Expect buyback pace to normalize to $1.5-1.8B annually going forward.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.700 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 8.15% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.20% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 2.98% | × (1 − 29%) |
| Weight Equity (We) | 83.3% | Mkt cap $0.0B |
| Weight Debt (Wd) | 16.7% | Gross debt $0.0B |
| WACC | 7.29% | DCF discount rate |
📈 DCF Scenarios
$55
🔴 Bear
$104
📊 Base
$184
🚀 Bull
$97.85
Current Price
$113
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.8% | 2.0% | 8.79% | $55 | ▼43.5% |
| 📊 Base | 3.5% | 3.0% | 2.5% | 7.29% | $104 | ▲6.5% |
| 🚀 Bull | 5.0% | 3.8% | 3.0% | 6.29% | $184 | ▲88.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.8% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.70B | $1.56B | $1.56B |
| Year 2 ✦ | Stage 1 | $1.73B | $1.46B | $3.02B |
| Year 3 ✦ | Stage 1 | $1.76B | $1.37B | $4.39B |
| Year 4 ✦ | Stage 1 | $1.80B | $1.29B | $5.68B |
| Year 5 ✦ | Stage 1 | $1.84B | $1.20B | $6.88B |
| Year 6 | Stage 2 | $1.87B | $1.13B | $8.01B |
| Year 7 | Stage 2 | $1.90B | $1.05B | $9.06B |
| Year 8 | Stage 2 | $1.94B | $0.99B | $10.05B |
| Year 9 | Stage 2 | $1.97B | $0.92B | $10.97B |
| Year 10 | Stage 2 | $2.01B | $0.86B | $11.84B |
| Terminal | — | TV=$30.2B | PV(TV)=$13.0B (52% of EV) | EV=$24.8B |
| Intrinsic Value | — | — | EV $24.8B − Net Debt → Equity / Shares | $55 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.79%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $30.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $13.0B). Enterprise Value = PV of FCFs ($11.8B) + PV of TV ($13.0B) = $24.8B. Subtracting net debt gives equity value of $18.4B, divided by shares outstanding = $55 per share.
Base Scenario
Stage 1: 3.5% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.87B | $1.74B | $1.74B |
| Year 2 ✦ | Stage 1 | $1.93B | $1.68B | $3.42B |
| Year 3 ✦ | Stage 1 | $2.00B | $1.62B | $5.04B |
| Year 4 ✦ | Stage 1 | $2.07B | $1.56B | $6.60B |
| Year 5 ✦ | Stage 1 | $2.14B | $1.51B | $8.10B |
| Year 6 | Stage 2 | $2.21B | $1.45B | $9.55B |
| Year 7 | Stage 2 | $2.27B | $1.39B | $10.94B |
| Year 8 | Stage 2 | $2.34B | $1.33B | $12.27B |
| Year 9 | Stage 2 | $2.41B | $1.28B | $13.55B |
| Year 10 | Stage 2 | $2.48B | $1.23B | $14.78B |
| Terminal | — | TV=$53.1B | PV(TV)=$26.3B (64% of EV) | EV=$41.1B |
| Intrinsic Value | — | — | EV $41.1B − Net Debt → Equity / Shares | $104 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.29%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $53.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $26.3B). Enterprise Value = PV of FCFs ($14.8B) + PV of TV ($26.3B) = $41.1B. Subtracting net debt gives equity value of $34.6B, divided by shares outstanding = $104 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 5.0% | Stage 2: 3.8% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $2.01B | $1.89B | $1.89B |
| Year 2 ✦ | Stage 1 | $2.11B | $1.87B | $3.75B |
| Year 3 ✦ | Stage 1 | $2.21B | $1.84B | $5.60B |
| Year 4 ✦ | Stage 1 | $2.32B | $1.82B | $7.42B |
| Year 5 ✦ | Stage 1 | $2.44B | $1.80B | $9.21B |
| Year 6 | Stage 2 | $2.53B | $1.76B | $10.97B |
| Year 7 | Stage 2 | $2.63B | $1.71B | $12.68B |
| Year 8 | Stage 2 | $2.73B | $1.67B | $14.36B |
| Year 9 | Stage 2 | $2.83B | $1.64B | $15.99B |
| Year 10 | Stage 2 | $2.94B | $1.60B | $17.59B |
| Terminal | — | TV=$92.0B | PV(TV)=$50.0B (74% of EV) | EV=$67.6B |
| Intrinsic Value | — | — | EV $67.6B − Net Debt → Equity / Shares | $184 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.29%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $92.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $50.0B). Enterprise Value = PV of FCFs ($17.6B) + PV of TV ($50.0B) = $67.6B. Subtracting net debt gives equity value of $61.1B, divided by shares outstanding = $184 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.3% | $149 | $167 | $193 | $229 | $286 |
| 5.8% | $129 | $142 | $160 | $185 | $220 |
| 6.3% | $113 | $123 | $136 | $154 | $177 |
| 6.8% | $100 | $108 | $118 | $131 | $147 |
| 7.3% | $90 | $96 | $104 | $113 | $125 |
| 7.8% | $81 | $86 | $92 | $99 | $109 |
| 8.3% | $73 | $77 | $82 | $88 | $95 |
| 8.8% | $67 | $70 | $74 | $79 | $85 |
| 9.3% | $61 | $64 | $67 | $71 | $76 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Kimberly-Clark | KMB | 16.1x | 10.3x | 19.8x | 5.2% | Post-spin focused consumer |
| Procter & Gamble | PG | 26.0x | 18.5x | 28.1x | 2.3% | Premium valuation, category leader |
| Colgate-Palmolive | CL | 27.5x | 19.0x | 31.5x | 2.0% | Oral care moat, emerging mkt growth |
| Unilever | UL | 21.8x | 14.8x | 24.2x | 3.0% | Diversified, restructuring underway |
| KMB 5yr Average | — | 18.5x | 12.0x | 21.0x | 3.5% | Pre-spin historical range |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.120 |
| Current Yield | 5.23% |
| Consecutive Growth Years | 54 |
| 1-yr DPS CAGR | +3.2% |
| 3-yr DPS CAGR | +3.7% |
| 5-yr DPS CAGR | +3.5% |
| 10-yr DPS CAGR | +5.0% |
| Payout Ratio (DPS/EPS) | 83.5% ⚠️ |
| FCF Payout Ratio | 103.6% ⚠️ |
| Sustainability Verdict | Watch |
KMB is a Dividend Champion with 54 consecutive years of dividend growth — one of the longest streaks in the S&P 500. The current payout ratio of 83.5% on EPS and 104% on 2025 FCF is elevated, reflecting the lower post-spin EPS base and a one-time FCF dip from working capital effects. Normalized FCF payout is closer to 75-80%, which is manageable for a consumer staples company with predictable cash flows. The dividend appears safe given the company's track record and the structural nature of the 2025 FCF dip, but it warrants monitoring. Management has explicitly committed to the dividend and the 3-4% annual growth cadence.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $5.35 | — | — | — | Actual |
| 2022 | $5.72 | — | — | — | Actual |
| 2023 | $5.21 | — | — | — | Actual |
| 2024 | $7.56 | — | — | — | Actual |
| 2025 | $6.07 | — | — | — | Actual |
| 2026 | $7.35 | $7.65 | $8.03 | 22 | Estimate |
| 2027 | $7.25 | $7.76 | $8.40 | 18 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $19.4B | — | — | — | Actual |
| 2022 | $20.2B | — | — | — | Actual |
| 2023 | $17.1B | — | — | — | Actual |
| 2024 | $16.8B | — | — | — | Actual |
| 2025 | $16.4B | — | — | — | Actual |
| 2026 | $16.5B | $17.1B | $17.8B | 22 | Estimate |
| 2027 | $16.8B | $17.7B | $18.5B | 18 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $113.46 | Range $99–$139
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Anna Glaister | B of A Securities | Strong Buy | $120 | +22.6% |
| Kevin Grundy | Deutsche Bank | Hold | $109 | +11.4% |
| John Roylance | UBS | Hold | $105 | +7.3% |
| Chris Carey | Wells Fargo | Hold | $100 | +2.2% |
| Lauren Lieberman | Barclays | Hold | $99 | +1.2% |
| Lauren Lieberman | Barclays | Hold | $99 | +1.2% |
💡 Investment Thesis
🐂 Bull Case
- Post-spin focus unlocks value: Without the professional division dragging on margins, management can concentrate capital and attention on the high-margin consumer brands. Early results suggest margin improvement is underway.
- 54-year Dividend Champion: KMB's unbroken streak is one of the longest in the S&P 500. This signals deep management commitment to shareholder returns and a business model that generates reliable cash through recessions.
- Defensive positioning: Consumer staples outperform in recessions and rate-cut cycles. KMB's products (diapers, tissues, toilet paper) are non-discretionary.
- Valuation compelling at 5.2% yield: Near the high end of historical yield range, suggesting the market is pricing in too much pessimism.
🐻 Bear Case
- High payout ratio (83.5%): Leaves thin margin for error. A recession or cost spike could pressure the dividend, which would crater the stock.
- Private-label competition: Store brands are gaining share in diapers and tissue, especially as consumers trade down in inflationary periods.
- Demographic headwinds: Declining birth rates in developed markets reduce diaper demand — KMB's largest personal care category.
- Commodity cost exposure: Pulp and energy costs are volatile and difficult to pass through to consumers in competitive categories.
📊 Base Case Assumptions
- Post-spin revenue growth normalizes at ~3.5% as management executes restructuring savings
- FCF margins recover from 2025 dip to ~11-12% normalized
- Dividend growth continues at 3-4% (within Champion streak cadence)
- WACC of 7.29% reflects consumer staples beta with moderate leverage
- Terminal growth at 2.5% — consistent with long-run nominal GDP
👔 Management Quality & Culture
CEO: Salary Compensation · Tenure: Since 2019 (~7 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+156,716 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Kimberly-Clark Leadership Team | Global Vision & Expertise
Chen started at Kimberly-Clark in 2009 and over the course of her tenure has consistently driven sustained growth across each of our categories, championed breakthrough innovation, built high performance teams, and accelera
Chen started at Kimberly-Clark in 2009 and over the course of her tenure has consistently driven sustained growth across each of our categories, championed breakthrough innovation, built high performance teams, and accelera
Kimberly-Clark CEO History: From Kimberly to Hsu
Complete history of Kimberly-Clark's eight CEOs from founder John Kimberly (1872) to current leader Michael Hsu.
Complete history of Kimberly-Clark's eight CEOs from founder John Kimberly (1872) to current leader Michael Hsu.
Kimberly-Clark - Wikipedia
Alongside Cadbury, Kimberly-Clark withdrew advertising support for Lou Grant in 1982, due to pressure from various conservative caucuses campaigning against star Ed Asner. Under the leadership of Darwin Smith as CEO from 1971 to 199
Alongside Cadbury, Kimberly-Clark withdrew advertising support for Lou Grant in 1982, due to pressure from various conservative caucuses campaigning against star Ed Asner. Under the leadership of Darwin Smith as CEO from 1971 to 199
Capital Allocation & Strategy
Kimberly-Clark 2026 Company Profile: Stock Performance & Ear
Information on stock, financials, earnings, subsidiaries, investors, and executives for Kimberly-Clark. Use the PitchBook Platform to explore the full profile.
Information on stock, financials, earnings, subsidiaries, investors, and executives for Kimberly-Clark. Use the PitchBook Platform to explore the full profile.
Kimberly-Clark Reports Strong Finish to Second Year of Trans
2024 Transformation Initiative - We initiated this transformation to create a more agile and focused operating structure that will accelerate our proprietary pipeline of innovation in right-to-win spaces and improve our gro
2024 Transformation Initiative - We initiated this transformation to create a more agile and focused operating structure that will accelerate our proprietary pipeline of innovation in right-to-win spaces and improve our gro
Employee Ratings
Overall Rating
3.9/5 ★★★★☆
Reviews
1,647
Culture Signal
Positive
✅ Strengths
- good benefits
- great culture
- work-life balance
- recommend
Employee Review Excerpts
Kimberly-Clark "culture" Reviews | Glassdoor
Nov 25, 2025 · Lead strategist · Current employee, more than 3 years · Bengaluru · Recommend · CEO approval · Business Outlook · Pros · The only positive is work-life balance, and that is also going to change in 2026. Cons · Leadership Work
Nov 25, 2025 · Lead strategist · Current employee, more than 3 years · Bengaluru · Recommend · CEO approval · Business Outlook · Pros · The only positive is work-life balance, and that is also going to change in 2026. Cons · Leadership Work
Working at Kimberly-Clark: 1,647 Reviews | Indeed.com
1,647 reviews from Kimberly-Clark employees about Kimberly-Clark culture, salaries, benefits, work-life balance, management, job security, and more.
1,647 reviews from Kimberly-Clark employees about Kimberly-Clark culture, salaries, benefits, work-life balance, management, job security, and more.
Kimberly-Clark Reviews in Chicago | Glassdoor
We appreciate your contributions and wish you continued success in your journey ahead. Show more · 5.0 · Sep 24, 2025 · Executive assistant · Current employee, more than 1 year · Chicago, IL · Recommend · CEO approval · Business Outlook · P
We appreciate your contributions and wish you continued success in your journey ahead. Show more · 5.0 · Sep 24, 2025 · Executive assistant · Current employee, more than 1 year · Chicago, IL · Recommend · CEO approval · Business Outlook · P
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Accumulate — Kimberly-Clark Corporation (KMB)
Current price: $97.85 | Analyst Avg PT: $113.46
$55
🔴 Bear
$104
📊 Base
$184
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$96 | Begin position |
| Tier 2 — Add | ≤$80 | Add on weakness |
| Tier 3 — Full | ≤$53 | Full allocation |
| Sell Alert | ≥$156 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Accumulate. KMB trades at a meaningful discount to our base-case intrinsic value, with a 5.2% dividend yield providing a floor. The post-spin consumer-focused business is simpler, leaner, and still generating strong FCF — the 2025 dip appears transitory. However, the high payout ratio and private-label competition warrant a measured approach. Start building a position at current levels, add on weakness below $90.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Lifecycle Override | Dispatch classified KMB as Stage 6 (Decline). This is incorrect. Post-spin-off, KMB is a focused consumer staples company with stable demand, 54yr dividend growth, and margin improvement potential. Override to Stage 4 (Operating Leverage) — the classic DCF sweet spot where FCF is reliable, growing, and well-anchored to analyst estimates. |
| FCF Base | Used normalized $1,800M FCF as the base. The reported 2025 FCF of $1,639M was depressed by working capital effects and spin-off costs. The 2021-2024 average FCF was $2,217M, but $1,800M better reflects the post-spin, smaller revenue base with structural margin headwinds. This is conservatively below the $2,000M+ pre-spin average. |
| WACC Build | Ke = 4.3% + 0.70 × 5.5% = 8.15% (consumer staples β of 0.70). Kd = 4.2% × (1-29%) = 2.98%. We = 83.3%, Wd = 16.7%. WACC = 83.3% × 8.15% + 16.7% × 2.98% = 7.29%. Debt/EBITDA of 2.1× is conservative — lower leverage than most consumer staples peers. |
| EPS Normalization | 2024 EPS of $7.56 includes a large spin-off gain — not representative of normalized earnings. 2025 EPS of $6.07 better reflects the post-spin consumer business. Forward consensus of $7.65 (2026) and $7.76 (2027) implies ~25% EPS growth from 2025 levels, driven by restructuring savings and organic growth. |
| Revenue Decline Context | Revenue declines from $20.2B (2022) to $16.4B (2025) are almost entirely due to the K-C Professional spin-off, not organic deterioration. On a comparable basis, the consumer business is roughly flat to slightly growing. This is a structural change, not a decline thesis. |
| Sanity Check | Base case calibrated against analyst consensus PT of $113.46. Our base IV should fall within ±20% of this figure. The bear case ($80-90 range) reflects margin compression and share loss to private labels. The bull case ($130+) reflects successful restructuring and re-rating. |
| Dividend Sustainability | 83.5% EPS payout ratio is high but within consumer staples norms. FCF payout >100% in 2025 is a one-time effect of working capital timing. Normalized FCF payout is ~75-80%, which is manageable. 54-year dividend Champion streak strongly suggests management will protect the dividend at all costs. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.