DCF Studio

    KMB · NMS · Consumer Defensive

    Kimberly-Clark Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 62.81

    Market price

    USD 97.86

    Implied upside

    -35.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 62.81-35.8%
    Exit multiple
    USD 63.39-35.2%
    Market price
    USD 97.86

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 15.4bnUSD 14.4bnUSD 13.4bnUSD 12.5bnUSD 11.7bn-6.6%
    EBITUSD 2.3bnUSD 2.1bnUSD 2.0bnUSD 1.9bnUSD 1.7bn-6.6%
    NOPATUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.4bn-6.6%
    Add depreciation & amortisationUSD 678.8mUSD 634.1mUSD 592.3mUSD 553.3mUSD 516.9m-6.6%
    Less capital expenditureUSD -768.9mUSD -718.3mUSD -671.0mUSD -626.9mUSD -585.6m-6.6%
    Less increase in working capitalUSD 208.0mUSD 194.3mUSD 181.6mUSD 169.6mUSD 158.4m+6.6%
    Free cashflow to firmUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bn-6.6%
    Discount factor0.96620.90210.84220.78630.7341-
    Present valueUSD 1.9bnUSD 1.6bnUSD 1.4bnUSD 1.2bnUSD 1.1bn-12.8%
    Present Value Of The ForecastUSD 7.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.513Reported 0.273, pulled toward 1.0 (Blume)
    Cost of equity7.82%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 32.5bn81.7% of capital
    Total debtUSD 7.3bn18.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.11%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 62.81

    74% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.4bn
    Less reinvestment at g/ROIC (10.7% of NOPAT)
    USD -149.4m
    Capitalised
    USD 1.2bn
    ROIC (reported)
    23.3%
    Terminal value, undiscounted
    USD 27.6bn
    Terminal value, discounted
    USD 20.3bn
    Enterprise value
    USD 27.5bn
    Less net debt
    USD 6.5bn
    Equity value
    USD 20.9bn

    Exit at 12.4x EBITDA

    Value per shareUSD 63.39

    74% of EV

    Terminal value, undiscounted
    USD 27.9bn
    Terminal value, discounted
    USD 20.5bn
    Enterprise value
    USD 27.6bn
    Less net debt
    USD 6.5bn
    Equity value
    USD 21.1bn

    Spread between methods: 1%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.11%90.67102.94119.87144.79185.15
    6.11%68.2974.9783.4794.68110.16
    7.11%53.8657.9062.8168.8976.65
    8.11%43.7746.3949.4853.1557.61
    9.11%36.3038.1040.1542.5345.32

    Outlined: this model. Green text: above today's price of 97.86. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-6.6%1.8%+8.4pp
    EBIT margin14.8%21.3%+6.5pp
    Discount rate7.1%5.6%-1.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.