Intrinsic value of Kimberly-Clark - KMB

Previous Close

$125.28

  Intrinsic Value

$10.57

stock screener

  Rating & Target

str. sell

-92%

  Value-price divergence*

-76%

Previous close

$125.28

 
Intrinsic value

$10.57

 
Up/down potential

-92%

 
Rating

str. sell

 
Value-price divergence*

-76%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of KMB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 44.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -2.09
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  18,202
  18,566
  18,993
  19,481
  20,029
  20,636
  21,303
  22,028
  22,813
  23,660
  24,568
  25,539
  26,575
  27,679
  28,852
  30,097
  31,415
  32,812
  34,288
  35,848
  37,495
  39,233
  41,066
  42,998
  45,034
  47,177
  49,435
  51,811
  54,311
  56,941
  59,708
Variable operating expenses, $m
 
  16,948
  17,334
  17,776
  18,272
  18,821
  19,424
  20,081
  20,791
  21,557
  22,378
  23,109
  24,047
  25,046
  26,107
  27,233
  28,427
  29,690
  31,026
  32,438
  33,928
  35,501
  37,159
  38,908
  40,749
  42,689
  44,732
  46,882
  49,144
  51,524
  54,028
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  14,885
  16,948
  17,334
  17,776
  18,272
  18,821
  19,424
  20,081
  20,791
  21,557
  22,378
  23,109
  24,047
  25,046
  26,107
  27,233
  28,427
  29,690
  31,026
  32,438
  33,928
  35,501
  37,159
  38,908
  40,749
  42,689
  44,732
  46,882
  49,144
  51,524
  54,028
Operating income, $m
  3,317
  1,618
  1,659
  1,705
  1,757
  1,815
  1,879
  1,948
  2,022
  2,103
  2,189
  2,430
  2,528
  2,633
  2,745
  2,863
  2,989
  3,121
  3,262
  3,410
  3,567
  3,732
  3,907
  4,090
  4,284
  4,488
  4,703
  4,929
  5,167
  5,417
  5,680
EBITDA, $m
  4,022
  2,365
  2,420
  2,482
  2,552
  2,629
  2,714
  2,807
  2,907
  3,014
  3,130
  3,254
  3,386
  3,527
  3,676
  3,835
  4,003
  4,180
  4,369
  4,567
  4,777
  4,999
  5,232
  5,478
  5,738
  6,011
  6,298
  6,601
  6,920
  7,255
  7,607
Interest expense (income), $m
  315
  313
  259
  272
  286
  303
  321
  340
  362
  385
  410
  437
  466
  496
  529
  564
  601
  640
  681
  725
  771
  819
  871
  925
  982
  1,043
  1,106
  1,173
  1,243
  1,317
  1,395
Earnings before tax, $m
  3,009
  1,305
  1,399
  1,433
  1,471
  1,513
  1,558
  1,607
  1,660
  1,718
  1,779
  1,993
  2,062
  2,137
  2,216
  2,299
  2,388
  2,482
  2,581
  2,686
  2,796
  2,913
  3,036
  3,165
  3,302
  3,445
  3,597
  3,756
  3,924
  4,100
  4,285
Tax expense, $m
  922
  352
  378
  387
  397
  408
  421
  434
  448
  464
  480
  538
  557
  577
  598
  621
  645
  670
  697
  725
  755
  786
  820
  855
  891
  930
  971
  1,014
  1,059
  1,107
  1,157
Net income, $m
  2,166
  953
  1,022
  1,046
  1,074
  1,104
  1,137
  1,173
  1,212
  1,254
  1,299
  1,455
  1,506
  1,560
  1,617
  1,679
  1,743
  1,812
  1,884
  1,961
  2,041
  2,126
  2,216
  2,311
  2,410
  2,515
  2,626
  2,742
  2,864
  2,993
  3,128

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  923
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,602
  14,889
  15,231
  15,622
  16,062
  16,549
  17,083
  17,665
  18,295
  18,973
  19,701
  20,480
  21,312
  22,197
  23,137
  24,135
  25,193
  26,312
  27,496
  28,747
  30,068
  31,462
  32,932
  34,481
  36,114
  37,833
  39,643
  41,548
  43,553
  45,662
  47,881
Adjusted assets (=assets-cash), $m
  13,679
  14,889
  15,231
  15,622
  16,062
  16,549
  17,083
  17,665
  18,295
  18,973
  19,701
  20,480
  21,312
  22,197
  23,137
  24,135
  25,193
  26,312
  27,496
  28,747
  30,068
  31,462
  32,932
  34,481
  36,114
  37,833
  39,643
  41,548
  43,553
  45,662
  47,881
Revenue / Adjusted assets
  1.331
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
Average production assets, $m
  7,225
  7,371
  7,540
  7,734
  7,952
  8,193
  8,457
  8,745
  9,057
  9,393
  9,753
  10,139
  10,550
  10,989
  11,454
  11,948
  12,472
  13,026
  13,612
  14,232
  14,886
  15,576
  16,303
  17,070
  17,878
  18,729
  19,626
  20,569
  21,561
  22,606
  23,704
Working capital, $m
  -731
  -538
  -551
  -565
  -581
  -598
  -618
  -639
  -662
  -686
  -712
  -741
  -771
  -803
  -837
  -873
  -911
  -952
  -994
  -1,040
  -1,087
  -1,138
  -1,191
  -1,247
  -1,306
  -1,368
  -1,434
  -1,503
  -1,575
  -1,651
  -1,732
Total debt, $m
  7,630
  6,326
  6,634
  6,986
  7,382
  7,820
  8,301
  8,824
  9,391
  10,002
  10,657
  11,358
  12,106
  12,903
  13,749
  14,648
  15,600
  16,607
  17,673
  18,799
  19,987
  21,242
  22,565
  23,959
  25,428
  26,975
  28,605
  30,319
  32,124
  34,022
  36,019
Total liabilities, $m
  14,704
  13,400
  13,708
  14,060
  14,456
  14,894
  15,375
  15,898
  16,465
  17,076
  17,731
  18,432
  19,180
  19,977
  20,823
  21,722
  22,674
  23,681
  24,747
  25,873
  27,061
  28,316
  29,639
  31,033
  32,502
  34,049
  35,679
  37,393
  39,198
  41,096
  43,093
Total equity, $m
  -102
  1,489
  1,523
  1,562
  1,606
  1,655
  1,708
  1,766
  1,829
  1,897
  1,970
  2,048
  2,131
  2,220
  2,314
  2,414
  2,519
  2,631
  2,750
  2,875
  3,007
  3,146
  3,293
  3,448
  3,611
  3,783
  3,964
  4,155
  4,355
  4,566
  4,788
Total liabilities and equity, $m
  14,602
  14,889
  15,231
  15,622
  16,062
  16,549
  17,083
  17,664
  18,294
  18,973
  19,701
  20,480
  21,311
  22,197
  23,137
  24,136
  25,193
  26,312
  27,497
  28,748
  30,068
  31,462
  32,932
  34,481
  36,113
  37,832
  39,643
  41,548
  43,553
  45,662
  47,881
Debt-to-equity ratio
  -74.804
  4.250
  4.360
  4.470
  4.600
  4.730
  4.860
  5.000
  5.130
  5.270
  5.410
  5.550
  5.680
  5.810
  5.940
  6.070
  6.190
  6.310
  6.430
  6.540
  6.650
  6.750
  6.850
  6.950
  7.040
  7.130
  7.220
  7.300
  7.380
  7.450
  7.520
Adjusted equity ratio
  -0.075
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,166
  953
  1,022
  1,046
  1,074
  1,104
  1,137
  1,173
  1,212
  1,254
  1,299
  1,455
  1,506
  1,560
  1,617
  1,679
  1,743
  1,812
  1,884
  1,961
  2,041
  2,126
  2,216
  2,311
  2,410
  2,515
  2,626
  2,742
  2,864
  2,993
  3,128
Depreciation, amort., depletion, $m
  705
  747
  761
  777
  794
  814
  836
  859
  884
  912
  941
  824
  858
  893
  931
  971
  1,014
  1,059
  1,107
  1,157
  1,210
  1,266
  1,325
  1,388
  1,454
  1,523
  1,596
  1,672
  1,753
  1,838
  1,927
Funds from operations, $m
  3,439
  1,700
  1,783
  1,823
  1,868
  1,918
  1,973
  2,032
  2,096
  2,166
  2,240
  2,279
  2,363
  2,453
  2,549
  2,650
  2,757
  2,871
  2,991
  3,118
  3,251
  3,393
  3,542
  3,698
  3,864
  4,038
  4,221
  4,414
  4,617
  4,831
  5,055
Change in working capital, $m
  207
  -11
  -12
  -14
  -16
  -18
  -19
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -76
  -80
Cash from operations, $m
  3,232
  1,711
  1,795
  1,837
  1,884
  1,936
  1,992
  2,053
  2,119
  2,190
  2,266
  2,307
  2,393
  2,485
  2,583
  2,686
  2,795
  2,911
  3,034
  3,163
  3,299
  3,443
  3,595
  3,755
  3,923
  4,100
  4,287
  4,483
  4,690
  4,907
  5,136
Maintenance CAPEX, $m
  0
  -587
  -599
  -613
  -629
  -646
  -666
  -688
  -711
  -736
  -764
  -793
  -824
  -858
  -893
  -931
  -971
  -1,014
  -1,059
  -1,107
  -1,157
  -1,210
  -1,266
  -1,325
  -1,388
  -1,454
  -1,523
  -1,596
  -1,672
  -1,753
  -1,838
New CAPEX, $m
  -771
  -146
  -170
  -194
  -218
  -241
  -265
  -288
  -312
  -336
  -360
  -386
  -411
  -438
  -466
  -494
  -524
  -554
  -586
  -619
  -654
  -690
  -728
  -767
  -808
  -851
  -896
  -943
  -993
  -1,044
  -1,098
Cash from investing activities, $m
  -732
  -733
  -769
  -807
  -847
  -887
  -931
  -976
  -1,023
  -1,072
  -1,124
  -1,179
  -1,235
  -1,296
  -1,359
  -1,425
  -1,495
  -1,568
  -1,645
  -1,726
  -1,811
  -1,900
  -1,994
  -2,092
  -2,196
  -2,305
  -2,419
  -2,539
  -2,665
  -2,797
  -2,936
Free cash flow, $m
  2,500
  978
  1,026
  1,030
  1,038
  1,048
  1,062
  1,078
  1,096
  1,118
  1,142
  1,128
  1,158
  1,189
  1,224
  1,261
  1,300
  1,343
  1,388
  1,437
  1,488
  1,543
  1,601
  1,662
  1,727
  1,795
  1,868
  1,944
  2,025
  2,110
  2,199
Issuance/(repayment) of debt, $m
  -213
  -1,304
  308
  352
  396
  438
  481
  524
  567
  611
  655
  701
  748
  797
  847
  898
  952
  1,008
  1,066
  1,126
  1,189
  1,254
  1,323
  1,394
  1,469
  1,547
  1,629
  1,715
  1,804
  1,898
  1,997
Issuance/(repurchase) of shares, $m
  -632
  638
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -874
  -666
  308
  352
  396
  438
  481
  524
  567
  611
  655
  701
  748
  797
  847
  898
  952
  1,008
  1,066
  1,126
  1,189
  1,254
  1,323
  1,394
  1,469
  1,547
  1,629
  1,715
  1,804
  1,898
  1,997
Total cash flow (excl. dividends), $m
  1,615
  311
  1,334
  1,383
  1,433
  1,487
  1,542
  1,601
  1,663
  1,729
  1,797
  1,830
  1,906
  1,986
  2,070
  2,159
  2,252
  2,351
  2,454
  2,563
  2,677
  2,797
  2,924
  3,056
  3,196
  3,343
  3,497
  3,659
  3,829
  4,008
  4,196
Retained Cash Flow (-), $m
  -72
  -1,591
  -34
  -39
  -44
  -49
  -53
  -58
  -63
  -68
  -73
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -181
  -191
  -200
  -211
  -222
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -1,280
  1,300
  1,344
  1,389
  1,438
  1,489
  1,543
  1,600
  1,661
  1,724
  1,752
  1,823
  1,897
  1,976
  2,059
  2,147
  2,239
  2,336
  2,438
  2,545
  2,658
  2,777
  2,901
  3,033
  3,171
  3,316
  3,468
  3,629
  3,797
  3,974
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  -1,172
  1,081
  1,006
  927
  846
  765
  684
  604
  527
  454
  377
  316
  260
  210
  167
  131
  100
  75
  55
  39
  27
  18
  12
  8
  5
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide. The Personal Care segment offers disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise, and other brands. The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins, and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve, and other brand names. The K-C Professional segment offers wipers, tissues, towels, apparel, soaps, and sanitizers under the Kleenex, Scott, WypAll, Kimtech, and Jackson Safety brands. The company sells household use products directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets, as well as through other distributors and e-commerce. It also sells products for away-from-home use through distributors and directly to manufacturing, lodging, office building, food service, and public facilities. Kimberly-Clark Corporation was founded in 1872 and is headquartered in Dallas, Texas.

FINANCIAL RATIOS  of  Kimberly-Clark (KMB)

Valuation Ratios
P/E Ratio 20.6
Price to Sales 2.5
Price to Book -438
Price to Tangible Book
Price to Cash Flow 13.8
Price to Free Cash Flow 18.2
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27%
Cap. Spend. - 3 Yr. Gr. Rate -4.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity -6369.6%
Total Debt to Equity -7480.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 16.2%
Ret/ On Assets - 3 Yr. Avg. 11.4%
Return On Total Capital 28.5%
Ret/ On T. Cap. - 3 Yr. Avg. 19.3%
Return On Equity -1569.6%
Return On Equity - 3 Yr. Avg. -383.3%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 36.5%
Gross Margin - 3 Yr. Avg. 35.4%
EBITDA Margin 22.1%
EBITDA Margin - 3 Yr. Avg. 17.4%
Operating Margin 18.2%
Oper. Margin - 3 Yr. Avg. 13.2%
Pre-Tax Margin 16.5%
Pre-Tax Margin - 3 Yr. Avg. 11.7%
Net Profit Margin 11.9%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 30.6%
Eff/ Tax Rate - 3 Yr. Avg. 33.3%
Payout Ratio 60.5%

KMB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KMB stock intrinsic value calculation we used $18202 million for the last fiscal year's total revenue generated by Kimberly-Clark. The default revenue input number comes from 2016 income statement of Kimberly-Clark. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KMB stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.2%, whose default value for KMB is calculated based on our internal credit rating of Kimberly-Clark, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kimberly-Clark.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KMB stock the variable cost ratio is equal to 91.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KMB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for Kimberly-Clark.

Corporate tax rate of 27% is the nominal tax rate for Kimberly-Clark. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KMB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KMB are equal to 39.7%.

Life of production assets of 12.3 years is the average useful life of capital assets used in Kimberly-Clark operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KMB is equal to -2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-102 million for Kimberly-Clark - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 356.049 million for Kimberly-Clark is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kimberly-Clark at the current share price and the inputted number of shares is $44.6 billion.

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COMPANY NEWS

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▶ Better Buy: Kimberly-Clark Corporation vs. Altria   [Jun-30-17 09:33AM  Motley Fool]
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▶ A Message For Uber: You Can't Scale Bad Culture   [Jun-22-17 01:58PM  Benzinga]
▶ [$$] Kimberly-Clark Reinvents the Diaper Business   [Jun-17-17 12:01AM  Barrons.com]
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▶ Better Buy: PepsiCo, Inc. vs. Kimberly-Clark Corp   [May-24-17 08:00AM  Motley Fool]
▶ How Kimberly Clark Corp Makes Most of Its Money   [May-23-17 09:03AM  Motley Fool]
▶ How Procter & Gamble Co. Makes Most of Its Money   [May-15-17 01:21PM  Motley Fool]
▶ 4 Key Quotes From Kimberly Clark Corp's Earnings Call   [May-08-17 02:18PM  Motley Fool]
▶ Clorox Stock Rises following Its Fiscal 3Q17 Results   [May-04-17 03:17PM  Market Realist]
▶ Kimberly-Clark Shows Signs of Weakness   [04:08PM  TheStreet.com]
▶ How Colgate-Palmolive Stock Reacted to 1Q17 Results   [May-01-17 03:01PM  Market Realist]
▶ Procter & Gamble Co. Earnings Drop on Industry Slowdown   [Apr-28-17 10:00AM  Motley Fool]
▶ The Stock Giant Round 2 pick: KMB   [Apr-27-17 02:46PM  CNBC Videos]
▶ 3 Surprises in Kimberly-Clark Corp's Quarterly Results   [Apr-25-17 07:51PM  Motley Fool]
▶ Company News for April 25, 2017   [09:40AM  Zacks]
▶ What Happened in the Stock Market Today   [Apr-24-17 04:53PM  Motley Fool]
Stock chart of KMB Financial statements of KMB Annual reports of KMB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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